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79–891 2013

AMERICAN ENERGY SECURITY AND INNOVATION: 

AN ASSESSMENT OF PRIVATE-SECTOR 

SUCCESSES AND OPPORTUNITIES IN ENERGY 

EFFICIENT TECHNOLOGIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

TUESDAY, FEBRUARY 26, 2013 

Serial No. 113–8 

( 

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 .......................................................................................... 2 

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

opening statement ................................................................................................ 3 

Prepared statement .......................................................................................... 4 

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

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

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

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

California, opening statement ............................................................................. 7 

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

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 214 

WITNESSES

Hon. Lisa Murkowski, A United States Senator from the State of Alaska, 

Ranking Member, Senate Energy and Natural Resources Committee ............ 9 

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

Hon. Jeanne Shaheen, A United States Senator from the State of New Hampshire ....................................................................................................................... 14

Prepared statement .......................................................................................... 17 

Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency, Office 

of Energy Efficiency and Renewable Energy, U.S. Department of Energy ..... 21 

Prepared statement .......................................................................................... 23 

Answers to submitted questions ...................................................................... 279 

Kevin C. Kosisko, Vice President Service, North America, ABB, Inc., on 

Behalf of National Electrical Manufacturers Association and Industrial Energy Efficiency Coalition ...................................................................................... 51 

Prepared statement .......................................................................................... 54 

Britta MacIntosh, Vice President, Business Development, NORESCO, on Behalf of Federal Performance Contracting Coalition .......................................... 95 

Prepared statement .......................................................................................... 97 

James Crouse, Executive Vice President of Sales and Marketing, Capstone 

Turbine Corporation, on Behalf of U.S. Combined Heat and Power Association ........................................................................................................................ 102 

Prepared statement .......................................................................................... 104 

Helen A. Burt, Senior Vice President and Chief Customer Officer, Pacific 

Gas and Electric Company .................................................................................. 114 

Prepared statement .......................................................................................... 116 

R. Neal Elliott, Associate Director of Research, American Council for an 

Energy-Efficient Economy ................................................................................... 127 

Prepared statement .......................................................................................... 129 

Ted Gayer, Co-Director, Economic Studies and Joseph A. Pechman Senior 

Fellow, The Brookings Institute ......................................................................... 144 

Prepared statement .......................................................................................... 146 

SUBMITTED MATERIAL

Press release from cable companies, submitted by Mr. Shimkus ........................ 216 

Report entitled, ‘‘Doubling U.S. Energy Productivity by 2030,’’ by the Alliance 

Commission on National Energy Efficiency Policy, submitted by Mr. 

Kinzinger .............................................................................................................. 219 

Statement of Arkema, Inc., submitted by Mr. Whitfield ...................................... 253 

Page

VI 

Statement of The Pew Charitible Trusts, submitted by Mr. Whitfield ............... 258 

Statement of The Alliance for Industrial Efficiency, submitted by Mr. 

Whitfield ............................................................................................................... 261 

Statement of the American Chemistry Council, submitted by Mr. Whitfield .... 265 

Statement of the Heat is Power Association, submitted by Mr. Whitfield ......... 270 

(1) 

AMERICAN ENERGY SECURITY AND INNOVATION: AN ASSESSMENT OF PRIVATE-SECTOR 

SUCCESSES AND OPPORTUNITIES IN ENERGY EFFICIENT TECHNOLOGIES 

TUESDAY, FEBRUARY 26, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:08 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Ed Whitfield 

(chairman of the subcommittee) presiding. 

Members present: Representatives Whitfield, Scalise, Shimkus, 

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

Kinzinger, Griffith, Upton (ex officio), Rush, McNerney, Tonko, 

Capps, Barrow, Matsui, Castor, Welch, and Waxman (ex officio). 

Staff present: Nick Abraham, Legislative Clerk; Gary Andres, 

Staff Director; Charlotte Baker, Press Secretary; Mike Bloomquist, 

General Counsel; Matt Bravo, Professional Staff Member; Allison 

Busbee, Policy Coordinator, Energy and Power; Patrick Currier, 

Counsel, Energy and Power; Carolyn Ferguson, Staff Assistant; 

Tom Hassenboehler, Chief Counsel, Energy and Power; Heidi King, 

Chief Economist; Ben Lieberman, Counsel, Energy and Power; Gib 

Mullan, Chief Counsel, Commerce, Manufacturing, and Trade; 

Mary Neumayr, Senior Energy Counsel; Andrew Powaleny, Deputy 

Press Secretary; Chris Sarley, Policy Coordinator, Environment 

and Economy; Lyn Walker, Coordinator, Admin/Human Resources; 

Jeff Baran, Democratic Senior Counsel; Phil Barnett, Democratic 

Staff Director; Greg Dotson, Democratic Staff Director, Energy and 

Environment; Caitlin Haberman, Democratic Policy Analyst; and 

Alexandra Teitz, Democratic Senior Counsel, Environment and 

Economy. 

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

Mr. WHITFIELD. Good morning, and I would like to call this hearing to order this morning. I will recognize myself for an opening 

statement. 

Anyone who focuses on energy issues, I believe, has been amazed 

at recent discoveries of resources that make it possible for America 

to be energy independent, both generating electricity and producing 

fuel for transportation purposes. Certainly, supply and demand affects price and if we can control price, we can be more competitive 

2 

in the global marketplace, strengthen our economy, and create jobs. 

That is certainly a goal to which we all aspire. 

Now, we have had several hearings about supply in this subcommittee, and today, we are going to focus on demand, and specifically, energy efficiency. In fact, today’s hearing is entitled 

‘‘American Energy Security and Innovation: An Assessment of Private-Sector Successes and Opportunities in Energy Efficient Technologies.’’ Just as we have been successful in finding additional resources for energy production, we have also made great strides in 

energy efficiency, and we can do even more. 

History teaches us that nothing is more efficient than the free 

market. The only thing you need to spur than improve energy efficiency is profit-seeking companies responding rationally to high energy bills. Any company that doesn’t use energy as wisely as possible will lose ground to a competitor that does. This is why free 

economies are the most efficient and have the lowest energy inputs 

per units of gross domestic product when you contrast that particularly with centrally-planned economies, which are certainly not as 

efficient. 

We all understand that government has a very important role to 

play and has contributed much in this area, such as utilizing the 

latest advances to improve efficiency in federal buildings, and in 

conducting energy efficiency research. And all of us are fans of the 

energy savings performance contract program over at DOE, and it 

continues to do a great job, and we look forward to making sure 

that it continues to make that kind of contribution. 

We have a great panel of witnesses today. We have three panels, 

and on the first panel, we are very fortunate to have two United 

States senators. We have Senator Lisa Murkowski of Alaska, who 

has been a leader in the energy sector. Senator, we really appreciate your taking time to be with us today. And Senator Shaheen 

of New Hampshire was given a speaking engagement this morning, 

and she is on her way, and it is not seldom that we have two senators over here, so we are always going to pay particular attention 

to what they say, because as they say, the House and the Senate 

need to work closely together on all these issues. So we are excited 

about the witnesses this morning, and I will introduce the three 

panels as we come to them. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

Energy prices are a function of supply and demand, and high prices are a clear 

sign that supply is struggling to keep up with demand. That is why expanding domestic energy supplies is a big part of the solution to the nation’s energy challenges 

and one that this subcommittee will continue to address. But this morning’s hearing 

will focus on the demand side of the energy equation, and specifically private sector 

efforts to develop and utilize innovative technologies and processes to reduce waste 

and cut costs. 

History teaches us that nothing is more efficient than the free market. The only 

thing you need to spur innovations that improve energy efficiency is profit-seeking 

companies responding rationally to high energy bills. Any company that doesn’t use 

energy as wisely as possible will lose ground to a competitor that does. This is why 

free economies are the most efficient and have the lowest energy inputs per unit 

of gross domestic product. Contrast that with centrally planned economies which are 

among the least efficient. 

These private sector innovations can take the form of energy efficient technologies 

like combined heat and power systems. They can also take the form of novel instruVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
3 

ments like energy savings performance contracts. We will discuss both kinds of innovations today. 

The benefits of energy efficiency are something that both Republicans and Democrats can agree upon. They are also something that both the House and the Senate 

can agree upon, which is why I am pleased that Senators Lisa Murkowski and 

Jeanne Shaheen are joining us to discuss energy efficiency efforts underway in the 

Senate. Those of us in the House are always ready to learn from the world’s greatest 

deliberative body. 

Some make the mistake of thinking that efficiency only happens as a result of 

federal regulations or other mandates. But the stories we will hear from our private 

sector witnesses demonstrate otherwise. Utilities, manufacturers, commercial property owners and others are continually developing clever new ways to save on their 

energy costs, and are not waiting for orders from Washington DC. 

In fact, government policy can sometimes get in the way of energy efficiency. For 

example, a provision included in the Energy Independence and Security Act of 2007 

mandates the elimination of all fossil fuel-generated energy use in new and modified 

federal buildings by the year 2030. This federal mandate potentially restricts the 

adoption of high-efficiency technologies such as natural gas combined heat and 

power and waste heat recovery systems in federal facilities. We need to reconsider 

any and all federal impediments to energy efficiency. 

On the other hand, there is a constructive role for the government to play, such 

as utilizing the latest advances to improve efficiency in federal buildings, and in 

conducting energy efficiency research. We need to steer government efforts in a positive direction. 

Necessity is the mother of invention, and the necessity brought on by expensive 

energy, tight budgets, and the pressures of global competition has fostered some 

great private sector advances in efficiency. I look forward to learning more about 

these exciting developments and yield back the balance of my time. 

Mr. WHITFIELD. And with that, Mr. Rush, I would recognize you 

for an opening statement. 

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 on the successes and opportunities in energy efficiency technology. It is my sincere hope that after hearing from today’s panel of witnesses, members on both sides of the aisle will 

be able to come together and move their country’s energy policy forward by working to enact common sense energy efficiency legislation. 

Mr. Chairman, I remain optimistic that this subcommittee may 

return to the days of enacting bipartisan and comprehensive energy policy like we did most recently in ’05 and ’07. I believe that 

the area of energy efficiency may, in fact, be the opportunity for us 

to do so. 

The story of energy efficiency is one that is filled with success 

stories that I really hope propel our Nation forward by making us 

more independent and more secure, while also reducing the cost of 

energy, both in our pocketbooks and its impact on the environment. 

According to a recent ACCC study, U.S. energy consumption in 

2010 was less than half of what it would have been without the energy efficiency improvements made since 1970. 

Mr. Chairman, while today’s hearing focuses on the progress 

made in the private sector, let us not forget that it was the leadership of State and Federal Government activities that paved the 

way for many of these energy efficiency successes. DOE rulemaking 

spurred dozens of national efficiency standards for appliances and 

equipment since 1987. ACCC—EEE, rather, found that these existing standards will provide net savings of $1.1 trillion through 2035, 

4 

while also reducing carbon pollution by the equivalent amount of 

taking approximately 118 coal-fired power plants offline by that 

same year. In fact, in 2010, overall U.S. energy use was 7 percent 

less than it would have been without these extending—existing, 

rather, standards. 

However, Mr. Chairman, it is important to note that the ACEEE 

also found, and I quote, ‘‘The prospect for future improvements is 

large.’’ In fact, the report estimates that additional energy efficiency efforts could reduce U.S. energy use by 42 to 59 percent over 

current projections, which will create over one million jobs and increase U.S. GDP by $100 to $200 million by the year 2050. 

So, Mr. Chairman, it is important that the Federal Government 

does not abdicate its responsibility, its leadership role, of promoting, of encouraging, of enticing interested stakeholders to continue with the progress that has already been made in energy efficiency technologies so that we may keep moving forward, moving 

our Nation forward. We have a rich and strong legacy to stand on, 

Mr. Chairman, and let us not abandon the work that has already 

been done. Energy efficiency has been the low-hanging fruit that 

may, indeed, as I said earlier, bring both sides together in a legislative manner while also making our Nation safer, more secure, and 

more attentive to the impacts of climate change. 

Mr. Chairman, I look forward to hearing from these outstanding 

members of the other body, our Nation’s leaders, and I look forward to this hearing. And with that, I yield back the balance of my 

time. 

[The prepared statement of Mr. Rush follows:] 

PREPARED STATEMENT OF HON. BOBBY L. RUSH

Thank you, Mr. Chairman, for holding today’s hearing on the successes and opportunities in energy efficient technologies. 

Mr. Chairman, it is my sincere hope that after hearing from today’s panel of witnesses, members from both sides of the aisle will be able to come together and move 

the country’s energy policy forward by working to enact commonsense energy efficiency legislation. 

I remain optimistic that this subcommittee may return to the days of enacting bipartisan and comprehensive energy policy, like we did most recently in 2005 and 

2007, and I believe the area of energy efficiency may, in fact, provide us with an 

opportunity to do so. 

Mr. Chairman, the story of energy efficiency is one that is filled with success stories that have really helped propel our country forward by making us more independent and secure, while also reducing the cost of energy, both in our pocketbooks 

and its impact to our environment. 

According to a recent American Council for an Energy-Efficient Economy 

(ACEEE) study, U.S. energy consumption in 2010 was less than half of what it 

would have been without the energy efficiency improvements made since 1970. 

Mr. Chairman, while today’s hearing focuses on the progress made in the private 

sector let us not forget that it was the leadership of state and federal government 

that paved the way for many of these energy efficiency successes. 

Department of Energy (DOE) rulemakings spurred dozens of national energy efficiency standards for appliances and equipment since 1987. 

ACEEE found that these existing standards will provide net savings of $1.1 trillion through 2035, while also reducing carbon pollution by the equivalent amount 

of taking approximately 118 coal-fired power plants offline by that same year. 

In fact, in 2010, overall U.S. electricity use was 7% lower than it would have been 

without these existing standards. 

However, Mr. Chairman, it is important to note that the ACEEE study also found 

that ‘‘the prospect for future improvements is large.’’ 

5 

In fact, the report estimates that additional energy efficiency efforts could reduce 

U.S. energy use by 42–59% over current projections, which would create over a million jobs and increase U.S. GDP by $100–200 billion by the year 2050. 

So, Mr. Chairman, it is important that the federal government does not abdicate 

its leadership role or responsibility of promoting, encouraging, and enticing interested stakeholders to continue with the progress that has already been made in energy efficiency technologies so that we keep moving the nation forward. 

Energy efficiency has proven to be the low-hanging fruit that may indeed bring 

both sides together, legislatively, while also making our country safer, more secure, 

and more attentive to the impacts of climate change. 

So I look forward to hearing from today’s panel of expert witnesses on the successes and opportunities in energy efficiency technologies, and with that I yield back 

the balance of my time. 

Mr. WHITFIELD. Well thank you, Mr. Rush. 

At this time, I recognize the chairman of the full committee, Mr. 

Upton, for a 5-minute opening statement. 

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

Mr. UPTON. Well thank you, Mr. Chairman. I want to thank both 

of our senators for being here. Thanks for crossing the Capitol this 

morning to provide your perspective on energy efficiency innovation. Energy efficiency is not only a bipartisan issue, but as your 

presence here today demonstrates, there is bicameral interest as 

well. 

You know, for an economy to thrive, it does need energy. In fact, 

increased energy consumption is often a harbinger of economic 

growth, a very good thing by any measure. When we talk about energy efficiency, I believe our goal is to maintain and enhance our 

economic growth by finding ways to maximize the ways that we 

use energy, to get the most bang for the buck. Energy efficiency 

measures are some of the simplest and most affordable ways to address U.S. energy demand. The U.S. has steadily improved its energy productivity as a result of advances in technology driven by 

private sector innovation. Reducing waste and consuming less energy are common sense strategies to cut costs, which is why the industrial and manufacturing sectors have undertaken significant efforts to improve efficiency and reap the resulting economic benefits. 

But significant energy efficiency opportunities remain, and we will 

hear about some of those opportunities, as well as the challenges, 

from our distinguished panelists today. 

We have got to remember that as the sequester takes center 

stage this week, that the Federal Government is the Nation’s largest user of energy, and sensibly utilizing energy-saving techniques 

can significantly reduce the amount of taxpayer dollars spent on 

federal energy costs. 

So on behalf of all of our colleagues, I welcome both of you here, 

and yield the balance of my time to Mr. Gardner. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

I want to welcome Senator Murkowski and Senator Shaheen—thank you for 

crossing the Capitol this morning to provide your perspectives on energy efficiency 

innovation. Energy efficiency is not only a bipartisan issue, but as your presence 

here today demonstrates, there is bicameral interest as well. 

6 

For an economy to thrive, it needs energy. In fact, increased energy consumption 

is often a harbinger of economic growth—a very good thing by any measure. When 

we talk about energy efficiency, I believe our goal is to maintain and enhance our 

economic growth by finding ways to maximize the ways we use energy—to get the 

most bang for the buck. Energy efficiency measures are some of the simplest and 

most affordable ways to address U.S. energy demand. The U.S. has steadily improved its energy productivity as a result of advances in technology driven by private sector innovation. Reducing waste and consuming less energy are commonsense 

strategies to cut costs, which is why the industrial and manufacturing sectors have 

undertaken significant efforts to improve efficiency and reap the resulting economic 

benefits. 

But significant energy efficiency opportunities remain, and we will hear about 

some of those opportunities—as well as the challenges—from our distinguished panelists today. We must also remember, as the sequester takes center stage this week, 

that the federal government is the nation’s largest user of energy, and sensibly utilizing energy savings techniques can significantly reduce the amount of taxpayer 

dollars spent on federal energy costs. 

On behalf of all my colleagues on the Energy and Commerce Committee, I want 

to again thank Senators Murkowski and Shaheen—and all of our panelists—for taking the time to be with us today, and we look forward to working together on these 

issues in the 113th Congress. 

Mr. GARDNER. Thank you, Mr. Chairman, and thank you, Chairman Whitfield and Ranking Member Rush, thank you for holding 

this hearing today. Over the past 2 years, I have become increasingly more interested in this topic of energy efficiency, and look forward to hearing our witness’s testimony this morning. 

There is a lot more that the Federal Government in particular 

could be doing to become more energy efficient, since we truly are 

the largest energy consumer in the Nation. That is why I have 

partnered with Mr. Welch of Vermont, who also serves on this committee, to form a caucus solely focused on advancing energy efficiency in a way that helps the environment and the taxpayer. Our 

caucus focuses on performance contracting, whether they be energy 

savings performance contracts, or utility energy service contracts. 

ESPCs and UESCs allow private companies to perform energy upgrades by taking on all the risks associated with those improvements. The company only gets paid when the monetary savings 

materialize. They are a win-win for government and the taxpayer, 

creating private sector jobs along the way. 

I truly believe that energy efficiency is an issue that Republicans 

and Democrats can come together on, as we have done in Colorado. 

And during times when this city can seem so partisan to the rest 

of the country, I think we should jump at this opportunity to do 

so. I will point out, however, that there is one minor impediment 

to moving forward with ESPCs, and in the way that many of us 

in this room would like to do so. While OMB does not score ESPCs, 

CBO does. Even though it saves money, it has no appropriated dollars with it. It is unfortunately restricting our ability to utilize a 

tool that makes complete sense during an economic downturn, and 

during a time when the Federal Government is trying to find a way 

to save money. 

I look forward to working with everyone on this issue, and the 

others in this room as we discuss what we can do to encourage energy efficiency here in Congress. 

Thank you, Mr. Chairman. I yield the remainder of my time. 

7 

Mr. WHITFIELD. Well thank you, Mr. Gardner, and at this time, 

I recognize the ranking member of the full committee, 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, Mr. Chairman. 

At its heart, energy efficiency is about reducing waste. Doing 

more with less. This frees up energy supplies, saves money, and reduces dangerous carbon pollution. 

Energy efficiency is good for consumers, good for business, good 

for our economy and job creation, and good for fighting dangerous 

climate change. 

A recent report from the International Energy Agency highlights 

the critical role of energy efficiency in slowing dangerous climate 

change. IEA concluded that if the world does not take action to reduce carbon pollution by 2017, then the energy infrastructure existing at that time will make it impossible to limit warming to 2 degrees Celsius. In other words, we have just 4 years to take serious 

actions to reduce carbon pollution, or we will be locked into a path 

forward that will lead to devastating climate change. But if we invest now in energy efficiency, we can give ourselves more time. 

According to the IEA, the rapid deployment of energy efficiency 

measures would give the world at least 5 additional years to develop long-term solutions. IEA also found that there are huge efficiency opportunities available. Cost effective energy efficiency 

measures using technology available today could reduce expected 

future energy use by over 40 percent. These measures, of course, 

would save consumers and businesses over $11 trillion through 

2050. Two-thirds of the potential energy efficiency savings remain 

untapped. Existing efficiency standards will provide net savings of over $1 

trillion through 2035, while reducing annual carbon emissions by 

470 million metric tons. That is equivalent to the annual emissions 

from over 100 coal-fired power plants. Without these existing 

standards, a typical household’s electricity use would be about 35 

percent higher. 

Buildings account for about 40 percent of our total energy consumption, and there is a lot we can do to make them more efficient. 

Tools for improving efficiency include building efficiency codes, performance goals, information disclosure, technical support, innovative financing approaches, and reduction of market barriers. 

We are going to hear today from two very distinguished members 

of the Senate. Senator Shaheen worked together with Senator 

Portman on a bipartisan bill that includes many good ideas. Senator Murkowski in the last Congress worked with Senator Bingaman on a package of consensus energy efficiency standards. We 

should build on both of these bipartisan efforts. 

We need to be ambitious. Study after study has identified a myriad of ways we could save energy, save money, and reduce dangerous carbon pollution. 

I look forward to hearing the testimony from our two senators 

and other witnesses today, and working on a bipartisan basis to do 

8 

something that I think is in the best interest of the American people. Yield back the balance of my time. 

[The prepared statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

At its heart, energy efficiency is about reducing waste. Doing more with less. This 

frees up energy supplies, saves money, and reduces dangerous carbon pollution. 

Energy efficiency is good for consumers, good for businesses, good for our economy 

and job creation, and good for fighting dangerous climate change. 

A recent report from the International Energy Agency (IEA) highlights the critical 

role of energy efficiency in slowing dangerous climate change. IEA concluded that 

if the world does not take action to reduce carbon pollution by 2017, then the energy 

infrastructure existing at that time will make it impossible to limit warming to 2 

degrees Celsius. In other words, we have just four years to take serious actions to 

reduce carbon pollution, or we will be locked into a path forward that will lead to 

devastating climate change. But if we invest now in energy efficiency, we can give 

ourselves more time. 

According to the IEA, the rapid deployment of energy efficiency measures would 

give the world at least five additional years to develop long-term solutions. IEA also 

found that there are huge efficiency opportunities available. Cost effective energy 

efficiency measures using technology available today could reduce expected future 

energy use by over 40%. These measures, of course, would save consumers and businesses over $11 trillion through 2050. Two-thirds of the potential energy efficiency 

savings remain untapped. 

Existing efficiency standards will provide net savings of over $1 trillion through 

2035 while reducing annual carbon emissions by 470 million metric tons. That’s 

equivalent to the annual emissions from over 100 coal-fired power plants. Without 

these existing standards, the typical household’s electricity use would be about 35% 

higher. 

Buildings account for about 40% of our total energy consumption, and there is a 

lot we could do to make them more efficient. Tools for improving energy efficiency 

include building efficiency codes, performance goals, information disclosure, technical support, innovative financing approaches, and reduction of market barriers. 

We are going to hear today from two very distinguished members of the Senate. 

Senator Shaheen worked together with Senator Portman on a bipartisan bill that 

includes many good ideas. Senator Murkowski in the last Congress worked with 

Senator Bingaman on a package of consensus energy efficiency standards. We 

should build on both of these bipartisan efforts. 

We need to be ambitious. Study after study has identified a myriad of ways we 

could save energy, save money, and reduce dangerous carbon pollution. 

I look forward to hearing the testimony from our two Senators and our other witnesses today, and working on a bipartisan basis to do something that I think is in 

the best interest of the American people. 

Mr. WHITFIELD. Thank you, Mr. Waxman, and that concludes the 

opening statements, so it is my pleasure now to introduce our first 

panel of witnesses. They have already been introduced, but I will 

do it again. We have Senator Lisa Murkowski, a U.S. Senator from 

Alaska, who is the ranking member of the Senate Energy and Natural Resources Committee, and we have the Honorable Jeanne 

Shaheen, U.S. Senator from New Hampshire, and as has already 

been stated, both of you all have worked on these issues and in a 

very bipartisan way, and so we welcome you to this committee. It 

is my understanding that when you finish your opening statements, that you both have some other responsibilities, so we will 

not be asking you any questions, but do look forward to your testimony, and Senator Murkowski, I will start with you and recognize 

you for 5 minutes. 

9 

STATEMENTS OF HON. LISA MURKOWSKI, A UNITED STATES 

SENATOR FROM THE STATE OF ALASKA, RANKING MEMBER, 

SENATE ENERGY AND NATURAL RESOURCES COMMITTEE; 

AND HON. JEANNE SHAHEEN, A UNITED STATES SENATOR 

FROM THE STATE OF NEW HAMPSHIRE 

STATEMENT OF HON. LISA MURKOWSKI 

Senator MURKOWSKI. Thank you, Mr. Chairman, Ranking Member Rush, Mr. Waxman, Mr. Upton, thank you for the opportunity 

to be here this morning to focus on an energy efficiency specifically. 

I don’t know how you do this, but the fact that you actually have 

your cups this morning that talk about energy efficiency—I don’t 

know if you do this for every hearing over here, but kudos to the 

committee here for being on subject. 

You note in your introduction of me that as the ranking member 

on the Energy Committee, I would obviously have an interest in 

this, but coming from the State of Alaska, as I do, where in some 

of our remote, rural communities, Alaskan families are spending up 

to 47 percent of the family’s budget on energy. There is every reason to be efficient. There is every reason to squeeze everything that 

you can out of the energy that comes our way, so I have taken a 

very keen interest in it, and as a consumer of energy, as we all are, 

we should all be focused on energy and what we can do to make 

a difference. 

Before I get into the specifics of energy efficiency, I want to offer 

some context for it in the position of a broader, more comprehensive look at energy policy. I brought with me today one of the Hill’s 

best sellers, this is Energy 20/20, a brilliant piece of 115 pages focusing on all things energy. And it is not very often around here 

that we actually see 200 recommendations on energy policy come 

out, a focus on energy as the bigger picture in terms of what we 

can do to strengthen our economy. I would commend it to you. It 

is available on my Web site. But let me give you the Reader’s Digest condensed version. It starts with a simple premise that energy 

is good. You can distill it in a bumper sticker, but it—think about 

it. It provides the basis for modern society. It allows us to lead 

happy and productive lives. It allows us to produce food, to manufacture, to communicate, to move. It is all good. 

And to give you five easy principles when we talk about energy, 

we should strive to make energy abundant, affordable, clean, diverse, and secure. And to accomplish all this, again, I outline about 

200 different recommendations, but as we think about energy policy here in this Congress and how to move forward in an area that 

really can help us be more efficient in our use, just think of it in 

context of these five attributes as a way to evaluate legislative actions that affect energy. And I would hope that taken together, we 

can agree that these are the attributes that should allow our policies to advance. 

Now, as your focus on American energy security and innovation 

reminds us, energy—efficiency is more than just driving energy 

consumption down. As I say in the blueprint here, using energy 

more efficiently is akin to developing more fuel. It also encompasses the more efficient production of energy. 

10 

Now, we must do more. We must do more to discourage the inefficiencies that I think we see oftentimes with regulation and how 

that is introduced into our energy supply chain. Our aim with energy efficiency policies should be to require less energy per unit of 

gross domestic product, and it is worth emphasizing that what we 

want is a rising GDP here as a measure of increasing prosperity. 

To underscore for the discussion of efficiency, we must never lose 

sight of the fact that we want our Nation—in fact, we want the 

world to be more prosperous, and we know prosperity is an aid to 

peace and human development, and energy is an aid to prosperity, 

so the title for the hearing today reminds us that we must see efficiency within the context of energy security and innovation. 

I am honored to be here with Senator Shaheen, who has been a 

leader on efficiency during her tenure on the Energy Committee 

with me. She continues to work with Senator Rob Portman on their 

version of a comprehensive energy efficiency bill. It was, and it 

thankfully remains, a bipartisan effort to make progress in an area 

where you all have pointed out, agreement is imminently possible, 

and I think that we saw this as the last Congress waned down. We 

managed to pass an efficiency bill, the American Energy Manufacturing Technical Corrections Act. There were only two Members of 

Congress that voted against that, so again, when you think about 

those things that we can do together, we should be looking to efficiency. 

So where do we go on efficiency this year as we look at ways to 

boost the efficiency of everything that we are doing, whether it is 

from the buildings here, our vehicles, our appliance, everything? 

The bill that Senator Shaheen and Senator Portman will offer, I 

think provides a promising path that is worthy of our consideration. You will see, complements of their work with reports from 

private sector associations like the Business Roundtable, the National Association of Manufacturers, the Alliance to Save Energy, 

we must continue to encourage outside stakeholders to reach these 

voluntary consensus agreements so that efficiency does not become 

synonymous with this top down approach of mandates that are 

issued by the Federal Government. I think given the constraints on 

federal finances that has been mentioned and the failure of mandates to deliver on certain promised results, those of us in the Federal Government should also put our own House in order. And as 

a start, I am going to be calling upon the GAO to review current 

funding and past performance of residential, commercial, and industrial energy efficiency programs within DOE, and then propose 

new authorization levels based on this review. 

Now finally, you have appropriately called attention with this 

hearing to private sector successes and opportunities, and as private—as President Reagan’s Administration reminded us more 

than 25 years ago, the greatest gains in energy efficiency come 

from the private sector in a growing economy. So here, the government’s priority should be the removal of barriers that stand in the 

way of their investments and the economic growth that make them 

possible. 

Again, I thank you for the opportunity to come over. I think it 

is important that we share our ideas between the two Houses, certainly amongst members and our parties, and I welcome the opporVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
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tunity for future dialogue on energy efficiency and all things energy. 

Thank you for the opportunity to be here this morning. 

[The prepared statement of Ms. Murkowski follows:] 

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Mr. WHITFIELD. Well Senator Murkowski, thanks so much for 

your testimony and your continued leadership, and welcome, Senator Shaheen. We—at this time, I would like to recognize you for 

5 minutes for your opening statement. 

STATEMENT OF HON. JEANNE SHAHEEN 

Senator SHAHEEN. Thank you very much, Mr. Chairman, Ranking Member Rush, and the members of the committee. Thank you 

for holding this very important hearing today. I am especially 

pleased to be joined by Congressman Waxman, the ranking member of the full committee, and I was pleased to see Chairman 

Upton here as well. 

I share the views, I think, of all of you that we have just heard 

from that energy efficiency is a win-win-win. We can save energy, 

save pollution, we can protect our national security, and we can 

also create jobs. And so it is a great place to start, and it has bipartisan support. 

I am also pleased to be joining my former ranking member. I 

served for 4 years on the Energy Committee with Senator Murkowski, and I know what great leadership she has provided on this 

issue, as well as so many other energy issues. She pointed out that 

with the assistance of this committee, last session we passed the 

American Energy Manufacturing Technical Corrections Act, which 

is a mouthful, but it included many energy efficiency provisions, including several from the Shaheen-Portman legislation that really 

helped to lay a foundation, I think, for further discussion about energy efficiency. 

I want to talk a little bit about the legislation that Senator 

Portman and I have introduced, but I want to begin by putting it 

in a little bit of context, as Senator Murkowski did. I think all of 

us would agree that we need a comprehensive national energy policy. We remain overly dependent on foreign oil. We remain reliant 

on an outdated energy infrastructure that harms American businesses and gives our overseas competitors an advantage. I think we 

have to utilize a wide range of energy sources, including natural 

gas, oil, nuclear, and renewables, like wind, biomass, and solar to 

address our future energy needs, and that this gives us an energy 

future that is more stable and gives us a stronger economy. 

As you all will highlight in today’s hearing, we can’t just talk 

about the supply side of energy; we also have to talk about how we 

consume energy once we have it. Efficiency, as we all know, is the 

cheapest, fastest way to deal with our energy needs and our economy’s energy independence. 

I wanted to start with a couple of examples that I think are important as we think about the successes we can achieve through 

energy efficiency. One of the most well-known is the recent 

makeover of the Empire State Building, which reduced energy costs 

by $4.4 million a year. It created 252 jobs, and it is estimated to 

have saved 4,000 metric tons of carbon emissions. They did things 

like install 6,500 new windows, a chiller plant retrofit, new building controls, and a web-based tenant energy management system. 

I had the opportunity not too long ago to visit a New Hampshire 

company called High Liner Foods, which is in Portsmouth, on the 

seacoast of New Hampshire. It is an energy-intensive seafood procVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
15 

essing plant that requires a tremendous amount of energy to operate. At one point, the 180,000 square foot facility consumed roughly 

2 megawatts of power at any given time during normal operations. 

So next to the cost of personnel and fish, their biggest cost was energy. But by installing efficient lighting, new boilers, and various 

demand response techniques, the company has made great strides 

in reducing its energy consumption, which allows them to expand 

their business footprint in the State, and be more cost effective in 

their production. 

We can also benefit from those companies that are producing energy efficiency technologies. We have a company in New Hampshire called Warner Power that has made the first breakthrough in 

transformers in over 100 years. It is called the hexaformer, and if 

we look at the—where we lose power, about 5 percent of all electricity generated in the United States is lost through inefficiencies 

in transformers. So with wide scale use of this transformer, the 

company estimates that 1.5 percent of all transformer energy losses 

could be eliminated, saving the country 60 terawatts of electricity 

per year. Now, you all may know more about terawatts than I do, 

but I translate that into five times New Hampshire’s annual electricity consumption, so significant savings. 

As Senator Murkowski pointed out, energy efficiency enjoys diverse support among industry advocates. Because too much of our 

debate around energy has been fossil fuels versus alternatives. It 

has been about whether we benefit in the Northeast versus who 

benefits in the South or the West or Alaska, and everybody benefits 

from energy efficiency. It is one of the great places where we can 

really come to some common agreement. 

Senator Portman and I have done that over the last couple of 

years. We introduced legislation last year. As I pointed out, some 

of those provisions were signed into law as part of the Act. Those 

provisions required federal—the DOE to utilize advanced metering 

tools, the Department of Energy to study and better understand 

the barriers to the deployment of industrial energy efficiency. And 

we are reintroducing the legislation this year. It will include provisions around buildings that are voluntary, not mandatory, but critical because it will provide incentives, and as we all know, buildings use about 40 percent of our energy each year. It will assist the 

manufacturing sector, which consumes more energy than any other 

sector of the U.S. economy, and it will require the Federal Government, as you all pointed out, the single largest energy user, to 

adopt more efficient building standards, smart metering technology, and Congressman Gardner, I certainly agree. We need to 

do more to make sure that people can take advantage of performance contracting. The bill will have a real measurable benefit to 

our economy and our environment. A study by the American Council for an Energy-Efficient Economy found that last year’s version 

of the bill would have saved consumers $4 billion by 2020, and 

helped businesses add 80,000 jobs to the economy. It would also cut 

carbon dioxide emissions by the equivalent of taking five million 

cars off the road. And in the process, it would nothave increased 

the deficit of this country at all. 

We passed in the committee last session the Shaheen-Portman 

legislation with broad bipartisan support. We had more than 200 

16 

endorsements from a wide range of businesses, environmental 

groups, think tanks, and trade associations, from the U.S. Chamber 

of Commerce to the National Association of Manufacturers, and the 

Natural Resources Defense Council, not usually a coalition that 

comes together around legislation. These are the kinds of nontraditional alliances that allowed us to make progress. I think we have 

the opportunity working together, both in a bipartisan way and a 

bicameral way, to build on the success of the last session, and to 

do something significant around energy efficiency. 

I thank this committee very much for the opportunity to be here, 

and for the work that you are doing, and look forward to 

partnering with you. 

[The prepared statement of Ms. Shaheen follows:] 

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Mr. WHITFIELD. Well Senator Shaheen, thanks very much, and 

once again, I want to thank both of you for coming over. We look 

forward to continuing a dialogue and working with members of the 

Senate in coming up with some solutions to these problems, and we 

look forward to working with you in the future. So thank you very 

much, and good luck in getting back over to the Senate. 

Senator MURKOWSKI. That is the hardest part of our job. 

Mr. WHITFIELD. At this time, I would like to call up the witness 

on the second panel, and that is the Honorable Dr. Kathleen 

Hogan, who is the Deputy Assistant Secretary for Energy Efficiency, the Office of Energy Efficiency and Renewable Energy, at 

the Department of Energy. So Dr. Hogan, if you would please step 

forward? 

Dr. Hogan, welcome. Thanks so much for taking time to join us 

this morning. Before I introduce you, I just want to make one comment. You know, we have these hearings and we really value the 

testimony that is provided to the committee, and we do have a rule 

that we try to follow, being able to receive the testimony 2 days 

prior to the hearing, and unfortunately, we received yours last 

night around 7:00 p.m. I know that you have a very busy schedule, 

but I hope that in the future if you all testify here, that you might 

be able to get here a few days early on this testimony so we have 

an opportunity to really look at it. 

But thank you for being with us today. We do look forward to 

your testimony and your expertise, and I will recognize you for 5 

minutes for your opening statement. 

STATEMENT OF HON. DR. KATHLEEN HOGAN, DEPUTY ASSISTANT SECRETARY FOR ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY 

Dr. HOGAN. Thank you, Chairman Whitfield, Ranking Member 

Rush, and members of the subcommittee for inviting me to testify 

today on behalf of the Department of Energy. As noted by many 

that have spoken already, energy efficiency is a large, untapped resource in the United States. It offers important benefits for the 

country, improved competitiveness, billions in consumer savings: 

growth in domestic jobs, greater reliability of our energy systems, 

and reduced reliance on foreign oil, as well as environmental benefits. 

This year’s State of the Union address included a goal to cut energy wasted by our homes and businesses by half over the next 20 

years, and to double our energy productivity. The Department of 

Energy’s energy efficiency portfolio is making important contributions towards these goals, including helping to ensure the longterm competitiveness of the United States, though much more 

needs to be done. We can start by looking at our homes and buildings. They consume about 40 percent of U.S. energy at a cost of 

about $400 billion a year, and there are many savings opportunities. DOE R&D has advanced new technologies, lighting, heating 

and cooling systems, windows that offer significant savings. Our 

work with leading home builders offers new homes with 50 percent 

savings over typical homes, as well as good indoor air quality and 

durability. We are working with organizations, and a number of 

22 

them, on home upgrade programs to address the large number of 

existing homes, most built before modern codes, and these programs offer savings of 15 to 30 percent. We have recently reached 

the major milestone of weatherizing more than a million low income homes since 2009, helping these families save hundreds of 

dollars each year. We have also partnered with over 100 commercial, industrial, and public sector organizations representing billions of building square feet, and $2 billion in financing. They have 

taken the President’s Better Buildings Challenge, with a goal of 

saving 20 percent or more on their energy bills by 2020, and then 

showcasing for others how to do it. Our minimum energy conservation standards that we implement now span more than 60 categories of appliances and equipment, and are currently saving consumers and businesses tens of billions of dollars each year. And as 

we have heard a lot of discussion this morning, as the Nation’s single largest user of energy, the Federal Government does continue 

to lead by example. We have reached large energy savings, water 

savings, and renewable energy goals, and are on target to meet the 

President’s challenge to implement $2 billion in performance-based 

contracts by December 2013, investments, as we have heard, that 

will reduce our energy use at no cost to the taxpayer. 

Turning to manufacturing, we are working on next generation 

technologies, processes, and materials that offer substantial improvements in efficiency, and which will position U.S. competitively 

for the future. In the State of the Union address, President Obama 

called for a network of manufacturing institutes that would help 

address cross-cutting challenges and help accelerate progress 

across the country. DOE is a partner in these efforts, for example, 

through a new pilot effort on additive manufacturing in Youngstown, Ohio, and we have recently announced a new energy innovation hub on critical materials at Ames Laboratory to develop solutions to domestic shortages of rare earth materials and other materials critical to U.S. energy security. We also have a strong track 

record with combined heat and power, which now has new market 

opportunities with lower cost natural gas, and we are supporting 

the President’s goal of 40 new gigawatts by 2020. 

Finally, DOE manages a diverse transportation research portfolio 

that spans many technologies and addresses light duty passenger 

cars to heavy duty trucks. Building on past DOE research successes, the President has launched the EV Everywhere Grand 

Challenge to spur American innovation and to make electric vehicles more affordable and convenient to own and drive than today’s 

gasoline-powered vehicles within the next 10 years. Electric vehicles do offer the potential for $1 a gallon gasoline equivalent, as 

well as a number of consumer conveniences, and the U.S. needs to 

continue to lead in this marketplace. 

So we are pleased to be part of meeting these challenges and contributing to a more secure, resilient, and competitive energy economy. We look forward to see what more we can do together with 

you, and thank you again for the opportunity to be here today. I 

am happy to answer any questions. 

[The prepared statement of Dr. Hogan follows:] 

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Mr. WHITFIELD. Well, Dr. Hogan, thanks so much for your comments. We appreciate, as I said, your being here, and I will recognize myself for 5 minutes of questions. 

I know you have a large portfolio of responsibilities, and certainly one of them does relate to the energy savings performance 

contracts. Would I be accurate in saying that part of your responsibility is working with other agencies of the Federal Government to 

encourage them to identify ways to be more efficient in their areas 

of responsibility? And do you know how many existing energy savings performance contracts are active at this time? 

Dr. HOGAN. So you are accurate in saying that my portfolio includes the Federal Energy Management Program that does work 

with the other agencies to help them achieve a variety of energy, 

water, and renewable energy targets, and to help them with energy 

savings performance contracts. Currently, there are over 250—perhaps 270, 280 performance contracts in place, driving investment 

of more than $2.5 billion in building improvements. 

Mr. WHITFIELD. Right, and my understanding, the private companies that get these contracts, they provide the financing for this 

and the government simply pays it back over time with a nominal 

interest charge. Is that correct? 

Dr. HOGAN. Energy savings, yes. So there is a sort of shared savings mechanism. 

Mr. WHITFIELD. And generally, how long do these contracts— 

what is the repayment terms on the contract, the length of time? 

Dr. HOGAN. They can vary based on what is necessary so that 

it works for the performance contracting firm. It can be 10, 15, 20 

years. 

Mr. WHITFIELD. Well, recently I attended a luncheon, and there 

were a large number of company representatives there, and all of 

them were uniformly excited about this program and very optimistic and positive about it. And I left that luncheon excited myself, because they were talking about all the great accomplishments 

they had made. And then, really to my surprise, about 3 days later, 

a group of employees at a federal installation came into my office, 

and they were complaining about a contract that had been completed on their installation and they were talking specifically about 

some sensor detectors that did not work right and some impact 

that it had on boilers, and it ended up costing a lot more money. 

And they had to bring people in on overtime to take care of these 

problems, and they ended up even disconnecting some of the systems. And we all know that you can find something that didn’t 

work correctly, but generally speaking, what sort of oversight do 

you have to ensure that at least those experiences are minimal? 

Dr. HOGAN. So I have the Federal Energy Management Program 

under my purview, and we do work with all the federal agencies 

around best practices to be following up with their energy service 

contracts. There are best practices for how to do evaluation, measurement, and verification on what is being achieved with these contracts, and we are happy to work with any sort of issues that address and help those agencies work them through so that we are 

getting the bang for the buck that ESPCs have to offer. 

31 

Mr. WHITFIELD. So they can always come back to you all and say 

hey, we have got—this is really not working the way it is supposed 

to be working. 

Dr. HOGAN. Absolutely. 

Mr. WHITFIELD. OK. Well, I have no further questions at this 

time. Mr. Rush, I will recognize you for 5 minutes of questioning. 

Mr. RUSH. I want to thank you, Mr. Chairman, and Secretary 

Hogan, it is certainly a pleasure to have you before the committee 

again here. I am proud of the many accomplishments that you have 

made and that your agency—the Department has made. 

I want to just focus on an area that centers on low income households. It has been well-established that low income households pay 

a disproportionate amount of their paychecks on energy bills, and 

many urban constituents, those who live in my district, the First 

Congressional District of Chicago—Illinois, rather, live in older 

homes and older buildings that are less energy efficient, and therefore, they are more expensive in the summer to cool and in the 

winter to heat. This leads to higher energy bills, and so my question to you is of the many programs that President Obama has implemented, many of his proposals on energy efficiency, I would like 

to know which ones do you think that are most important, that will 

have the most impact on our urban and low income communities? 

And so which one of the programs do you think that would happen? 

Dr. HOGAN. Well certainly the weatherization assistance program 

has had a large impact in lowering the energy bills of low income 

households. That is a several-decade old program at this point that 

has weatherized six million or so homes over this period of time, 

a million or so since the Recovery Act was put into place, and it 

is helping these households at this point save billions of dollars. We 

are doing a lot with that program to try and expand its use so it 

can be more effective in multi-family housing and engage with the 

owners of those buildings that need different mechanisms with 

which to engage with the Federal Government. So that has just 

been a very powerful program that way. 

Mr. RUSH. And the public housing-owned apartments, rental 

units, do you have any segmentation of the energy costs and are 

they—especially in newer public housing developments, are they 

meeting energy standards—our higher energy standards? Are you 

monitoring those, and what is going to be effective of those rental 

units and public housing? 

Dr. HOGAN. Yes, so newer buildings certainly are meeting higher 

efficiency levels than the vast number of the older buildings that 

are out there, and we continue to work with HUD around standards for federally-owned buildings, and work to continue to engage 

with building owners of tenant-occupied space. 

Mr. RUSH. I have—I think that in order to have a more vibrant 

and effective energy policy and energy culture more into the future, 

it is important that we frame—it is important that we introduce— 

it is important that we teach young people, even in the early 

grades of grammar school or grade school, the importance of energy. Do you see that as being a part of what you have done and 

what you plan to do in the future in terms of working with the 

school systems across the Nation? 

32 

Dr. HOGAN. Yes. We have done a number of educational initiatives with students in schools around energy challenges and other 

means so that we can educate people about energy in the school, 

energy at home, and create such a culture. I am happy to engage 

with you more on those topics. 

Mr. RUSH. Well, I would like to work with your office to identify 

the different types of programs and incentives that exist for lower 

income constituents. 

Mr. WHITFIELD. Gentleman’s time is expired. 

Mr. RUSH. Thank you, Mr. Chairman. 

Mr. WHITFIELD. At this time, I recognize the gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I am going—I will be 

real brief. 

The original mission of the Department of Energy was to decrease our reliance on imported crude oil. The mission statement 

that I pulled up recently has changed a little bit. There are reports 

today that we have actually imported more crude oil from Saudi 

Arabia over the last month than we have in the last previous 

years. So put me down as a skeptic about the benefits of parts of 

the Department of Energy. 

Having said that, Mr. Chairman, I would like to put into the 

record a press release from the National—from the Consumer Electronics Association and National Cable and Telecommunications 

Association—announced today these companies, Comcast, DirecTV, 

DISH, Time Warner Cable, Cox, Verizon, Charter, AT&T, Cablevision, Bright House Networks, and CenturyLink, and Manufacturers Cisco, Motorola, and EcoStar Technologies, and Aris, they have 

come to an agreement to obviously establish set box—set top boxes 

that have—are energy efficient, use the same technology as some 

of the electronics, you know, the sleeping modes and stuff. This is 

an example of the industry doing it without government assistance 

or help. I also believe in the consumers, and I am also concerned 

that if we push environmental standards and rules and regs on the 

individual homeowners, that folks in the poorer regions of this 

country can’t afford the more expensive homes that require new 

technology, versus homes that they want to purchase and live in. 

So with that, Mr. Chairman—— 

Mr. WHITFIELD. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. SHIMKUS. And I yield back my time. 

Mr. WHITFIELD. Gentleman yields back his time. 

I recognize the gentleman from California, Mr. Waxman, for 5 

minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Dr. Hogan, I want to ask you some questions about the national 

energy efficiency standards for appliances and equipment, but before I turn to that, I want to briefly discuss a DOE rulemaking 

under Section 433 of the Energy Independence and Security Act. 

Section 433 requires new and substantially rebuilt federal buildings to meet strong efficiency performance standards to reduce the 

use of energy generated from fossil fuels. DOE issued a proposed 

rule in 2010, but it lacks sufficient detail for stakeholders to evaluate how the standards would operate in practice. 

33 

Last summer, Senator Bingaman and I wrote to Secretary Chu 

requesting DOE to issue a supplemental notice of proposed rulemaking to address issues raised by stakeholders and allow for additional public comment. Your response indicated willingness to issue 

such a proposal, but we have been waiting since last August. 

Dr. Hogan, is DOE committed to issuing a supplemental proposal 

for implementing Section 433, and if so, by when? 

Dr. HOGAN. I am happy to be here to be able to relay that, indeed, we are committed to issuing a supplemental proposed rule. 

We actually do have that supplemental proposed rule at this point 

with the Office of Management Budget under review, which is part 

of our process before it can be shared with stakeholders. So if you 

rolled back the clock just a few weeks, if you looked at the OMB 

system, it would have shown that there was a final rule under review and now it will show that there is a proposed rule under review. 

I think also in the letter that we sent to you, we indicated that 

we did understand some of the issues that were being raised, both 

by federal agencies and stakeholders, and things that needed to be 

reconsidered, such as using renewable energy credits potentially to 

meet some of the requirements, how to define a retrofit or renovation, as well as how to deal with CHP and those are the types of 

issues that we will be addressing in this supplemental notice. 

Mr. WAXMAN. Will this proposal address the concerns stakeholders have raised regarding how to define major renovation that 

potential use of energy credits for compliance and clarifying the 

treatment of combined heat and power? 

Dr. HOGAN. Yes. 

Mr. WAXMAN. Section 433 was intended to reduce carbon pollution by promoting energy efficiency and renewable energy in government buildings in a common sense and reasonable manner. For 

example, it directs the Secretary to consider whether there are significant opportunities for substantial improvements in energy efficiency in determining whether a renovation is major and subject to 

the standards. Dr. Hogan, will you commit to work closely with the 

stakeholders throughout the rulemaking process to ensure that the 

rule is practical, reasonable, and effective? 

Dr. HOGAN. Absolutely we will make that commitment. 

Mr. WAXMAN. Thank you. Dr. Hogan, in your testimony you referenced the tremendous effectiveness of energy efficiency standards 

for appliances and equipment. Could you please elaborate on that? 

Dr. HOGAN. Sure. So the Department of Energy implements an 

appliance standards program. We implement them under congressional authorization to do so. I think there is always an interesting 

conversation around these standards. One of the ways to look at it 

is we are typically given authority to implement these standards 

when different states are taking different approaches, which creates a patchwork effect across the country that is very difficult for 

manufacturers to deal with. That is typically when they go to the 

Congress and ask for the Department to have such authorities. 

Mr. WAXMAN. Dr. Hogan, as I understand, the Department implements minimum energy conservation standards for more than 

60 categories of appliances and equipment. As a result of these 

standards implemented since 1987, energy users are estimated to 

34 

have saved tens of billions of dollars on their utility bills in 2010. 

Is that right? 

Dr. HOGAN. That is right. These standards that create a minimum level for the products that can be sold in this country are 

saving tens of billions of dollars. 

Mr. WAXMAN. I understand there are at least five proposed or 

final efficiency standards that have been sitting at OMB for over 

a year, and I understand that DOE has missed the rulemaking 

deadlines for another four standards that have not yet gone to 

OMB. I assume this is correct? Am I right? 

Dr. HOGAN. That is in the ballpark, yes. 

Mr. WAXMAN. Well, it makes no sense. These standards save 

money, strengthen our economy, and reduce pollution. I urge the 

Administration to move forward and get them finalized. 

Thank you so much for your—— 

Dr. HOGAN. Thank you. 

Mr. WAXMAN [continuing]. Participation in the hearing. Thank 

you, Mr. Chairman. 

Mr. WHITFIELD. Thank you, Mr. Waxman. 

I might just say that in the spirit of all of the above energy policy, many of us would like to get rid of Section 433, because it certainly discriminates against area of energy supply. 

At this time, I would like to recognize the gentleman from Louisiana, the vice chairman, Mr. Scalise, for 5 minutes. 

Mr. SCALISE. Thank you, Mr. Chairman. I appreciate you being 

with us, Ms. Hogan, and you know, as the chairman referenced, 

Section 433—and I think the ranking member of the full committee 

just was talking about that, too, and the rulemaking process. Can 

you tell me what kind of concerns you all have heard about these 

supplemental rules being developed? 

Dr. HOGAN. What we hear is stakeholders are looking for a fair 

amount of flexibility in the implementation of the standards. So 

some of the questions that have been raised are around the definition of a major renovation, so what actually triggers these significant savings requirements, whether or not you can use renewable 

energy credits to meet some of these savings targets, and how it 

is that CHP would be counted. Those are the types of issues that 

we think we can address through a notice of proposed rule and effectively engage stakeholders in getting to resolution. 

Mr. SCALISE. And it is something that concerns a lot of us, you 

know, just that section in general, you know, and I think we will 

be looking at it some more. 

The Federal Government is the largest user of electricity and 

fuel in the country, so I would like to know what steps you are taking to actually go throughout federal agencies and achieve real efficiencies and savings in the Federal Government. 

Dr. HOGAN. So the Federal Government currently is subject to a 

number of savings targets, either through congressional action or 

through executive orders. 

Mr. SCALISE. Which ones are actually saving taxpayers money? 

I am not talking about objectives and goals down the road years 

from now. How are you saving the tax—I mean, when we came in 

2 years ago into the Majority, we said we need to start controlling 

spending, because 40 cents of every dollar is borrowed money, and 

35 

we started with ourselves. We actually cut our own budgets here 

in the House. We cut the budgets for congressional offices, because 

we felt like you have to put your money where your mouth is. So, 

you know, as you all are going around telling everybody else to 

change their lifestyles, what kind of things are you doing within 

the Federal Government to save taxpayers money in terms of—— 

Dr. HOGAN. Sure. So take energy, the energy intensity of the 

Federal Government has been reduced by approximately 15 percent 

over the last 10 years or more. Also on water savings, we are meeting significant savings targets there as well. Both of those lead to 

substantial dollar savings across the federal fleet. 

Mr. SCALISE. I think a lot of us would say if you just, you know, 

turned out all the lights over at, you know, some of these agencies 

that are putting radical regulations in place that are costing us 

jobs and making families have to pay more for food and for electricity and for gasoline, you would probably not only become more 

efficient, you would help families and get this economy moving 

again. 

I just throw one suggestion out there as we are talking about efficiency, you know, the President today and every day for the last 

couple of days has sequesters going around. He has been flying 

around on Air Force One all around the country, trying to scare 

people about the effects, many of which are not even accurate on 

this sequester. I think you could probably be a lot more efficient, 

you might want to call the White House to tell him, just park Air 

Force One. I mapped it out. It is only less than 2 miles for the 

President just to drive right down here to the Capitol and sit down 

and let us work this thing out instead of flying all around the country, tens of thousands of miles, and using who knows how much 

fuel. You know, just park Air Force One and go the maybe 2 miles 

down here and just sit around a table and figure this thing out. 

But that might be a way to save a lot of energy. I am not sure if 

you want to pass that on to the White House. It might be a good 

idea. 

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

Mr. WHITFIELD. Thank you, Mr. Scalise. 

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

McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman, and I appreciate 

your opinion on that, Mr. Scalise. 

I thank you, Dr. Hogan, for coming and testifying today, and for 

your hard work in the Department. I just have a question about 

rate of return. What—do you have sort of an average rate of return 

a household might experience by investing in energy efficiency 

technology? How many years would it take back—to pay back a 

$5,000 investment in new windows or something like that, if it is 

just taking out of energy savings? 

Dr. HOGAN. Yes, so every home can be a little bit different, but 

I think there is a fair number of improvements somebody in their 

home can make that can have a payback of 3, 4, 5, 6, 7 years. 

Mr. MCNERNEY. So—and that is not including federal subsidies, 

or is that including? 

36 

Dr. HOGAN. That would be without any type of subsidies. That 

would just be based on doing insulation, windows, a more efficient 

furnace, et cetera. 

Mr. MCNERNEY. So the homes in lower income areas are going 

to be less efficient than the new homes in the more affluent areas, 

so they would have quicker rate of return, perhaps, than the newer 

homes, so federal help in that would be very effective in terms of 

reducing energy use and saving people money? 

Dr. HOGAN. Yes, I think people use incentives for any number of 

reasons. One is to help buy down the cost of these improvements, 

but also, as we know from utility programs around the country, you 

use some incentives just to even get people’s attention, just to help 

get those improvements moving. 

Mr. MCNERNEY. Thank you. I was very thrilled to hear you talk 

about water savings. You know, I am from California and we have 

water wars out there, and water savings is a double win, because 

you are not only saving water, but you are saving energy because 

so much energy is needed to produce and deliver water. Are there 

significant programs in place to incentivize western users, particularly in southern California, to save water? 

Dr. HOGAN. We can look into that and get back. Certainly not at 

the federal level, but there is certainly the issues with water in 

California are being addressed by a number of the California agencies, and I know they are trying to put programs in place very similar to what the energy utilities have been doing for years. 

Mr. MCNERNEY. OK, one more area of questioning. Again, I was 

thrilled to hear you talk about electric vehicles, but I have heard 

some concern about companies installing equipment that might 

service all kinds of vehicles. Are you working with companies to address potential concerns of these businesses for installing stations 

that can accommodate all vehicles? What is the plan in terms of 

getting this out there in the business world? 

Dr. HOGAN. Yes, so we are trying to engage with organizations 

of all kinds around building out the right infrastructure around alternative vehicles. We have a Clean Cities Program that works 

with cities around, you know, helping them plan for the right infrastructure and build it out based on sort of what makes sense in 

their regions, and want to be doing this in as an efficient and effective a way as possible. 

Mr. MCNERNEY. So we are moving forward aggressively in that? 

Dr. HOGAN. Yes. 

Mr. MCNERNEY. And I think the new automobile efficiency 

standards are going to go a long ways in terms of getting us to use 

less fuel, and I applaud your efforts on that. 

Dr. HOGAN. Thank you. 

Mr. MCNERNEY. Thank you. With that, I yield back, Mr. Chairman. 

Mr. WHITFIELD. Thank you very much. 

At this time, I recognize the gentleman from Texas, Dr. Burgess, 

for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. I appreciate you having 

the hearing, appreciate the opportunity to hear from the Department of Energy. 

37 

Let me just say for the record, I am a big believer in energy efficiency. I do think that is the low-hanging fruit. I think that is the 

common ground that where certainly we can meet on many of these 

issues. Every July, I do an energy efficiency summit in the district 

back home in Texas. We have had speakers as diversified as David 

Porter for the Texas Railroad Commission to James Woolsey, the 

former Director of the CIA. I have tried to construct things in my 

life around energy efficiency, the home we live in, the hybrid car 

that I drive. So I am a believer in energy efficiency. I made those 

decisions based upon what was right for me and my family, not 

based on anything that the Federal Government told me to do. 

But since you are here, let me ask you a question. The number 

one question everyone in my district is asking is why are gas prices 

so high right now? Gasoline prices. 

Dr. HOGAN. I guess it is based on the cost of production and the 

cost of moving it through our systems. 

Mr. BURGESS. Well, if you are in the Department of Energy, presumably you have these discussions, correct? 

Dr. HOGAN. The Department of Energy does have discussions 

about what we can do in the short term and in the long term to 

address gas prices. I think in the short term what we can do is 

really give people tips about how to use the gasoline that they are 

using as efficiently as possible, and then in the longer term, we can 

clearly be figuring out how to increase low-cost supply, as well as 

use alternative fuel vehicles and further development in that space. 

Mr. BURGESS. Well, it is of concern that here we are in February, 

and back home in Texas right before I came up here, I filled up 

the hybrid with gasoline that cost $3.70 a gallon in Texas in February. That means in New York, after Memorial Day, they will be 

closing in on $5 a gallon gasoline. So I think this is a matter of 

some importance, and since the Department of Energy is involved 

in this, and this may have a direct effect on our economy generally. 

No one can forget that just before the meltdown that occurred in 

2008, our gasoline prices and diesel prices were sky high, and they 

certainly had an effect on the economy, so I would think this would 

be something that you would be discussing internally and maybe 

even some interagency discussions. Do you ever pick up the phone 

and call the people at the Commodities Futures Trading Commission? 

Dr. HOGAN. We do engage in conversations across the Federal 

Government, and we, of course, are very concerned about these 

prices and are doing what we can do at this point, yes. 

Mr. BURGESS. What does Mr. Ginsler at CFTC tell you that he 

is doing that may dovetail with what you are doing with the energy 

efficiency in the Department of Energy? 

Dr. HOGAN. We can give you a more detailed explanation, if you 

would like, on what the Federal Government is doing in this—— 

Mr. BURGESS. I would appreciate that very much, and again, I 

think that would be of general interest to people who are maybe 

watching this on C–SPAN. 

Now, in answer to—or actually, Mr. Waxman made a point about 

that he wanted to see things that were common sense directions 

and applied in a reasonable manner, and I think he was talking 

about the Federal Energy Management Program. So you have the 

38 

jurisdiction of federal buildings under your control, the energy efficiency of federal buildings? Is that correct? 

Dr. HOGAN. That is correct. 

Mr. BURGESS. Is this building under your control? 

Dr. HOGAN. I believe this is under the Office of the Architect of 

the Capitol. 

Mr. BURGESS. But you know, I will just say from my observation, 

having been in the congressional office buildings now for a few 

years, since 2007, 2008. Someone came in and changed all my light 

bulbs to CFLs. Nobody told me they were going to do it. Nobody 

warned me not to break one over my head one night, but there I 

was. I had CFLs in all the offices. Well, that is great. We are perhaps saving some energy by doing that, but no one has ever done, 

as far as I can tell, an energy audit of the Rayburn Building and 

discussed the effect of having single-pane glass on all of the windows. I have an office that faces west. In the summertime, it gets 

beastly hot. Is this something that your office might be interested 

in? 

Dr. HOGAN. We are happy to have a conversation about how to 

do an audit of the Capitol buildings—— 

Mr. BURGESS. Well, I am just shocked that the architect of the 

Capitol has not reached to you, as part of your mission is for the 

energy efficiency of federal buildings, and this is a big federal 

building that consumes a lot of energy. You changed all the light 

bulbs, but maybe there were other things you should have been 

looking at as well. 

Dr. HOGAN. Well I think if we engage the Office of the Architect, 

we will see that they are doing a lot more around the Capitol buildings, and probably just started with, as we were saying, the lowhanging fruit, and certainly doing those audits is a cornerstone of 

what we are doing across the entire federal family. 

Mr. BURGESS. So can I assume that there are conversations between your office and the Office of the Architect of the Capitol as 

far as the energy efficiency of—the energy consumption of federal 

buildings, at least on the House side? 

Dr. HOGAN. We have been engaged with the Office of the Architect in their plans, yes. 

Mr. WHITFIELD. Gentleman’s time is expired. 

Mr. BURGESS. Well, Mr. Chairman, maybe if you could share 

some of that information with our office as well. We would appreciate that. 

Mr. WHITFIELD. OK. 

Mr. BURGESS. Thank you, and I will yield back. 

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

New York, Mr. Tonko, for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

Dr. Hogan, welcome, and I have a couple of questions about combined heat and power, and the President’s 2012 Executive Order on 

industrial energy efficiency. 

What role do you see for the—is the federal procurement going 

to play in achieving the President’s goals of deploying more combined heat and power systems? 

Dr. HOGAN. So certainly as the largest energy user and as a big 

procurer of equipment, the Federal Government has a big role to 

39 

play, and we are currently trying to put together a broader strategy on what that role could look like. Though what we are doing 

in the immediate term is exploring extending a pilot program that 

we have underway in the ESPC space. We have been standing up 

a pilot program called ENABLE to allow the ESCOs to engage in 

the smaller buildings that are within the federal family that typically get overlooked, and we are looking to expand that ENABLE 

pilot to encourage combined heat and power or allow investments 

in a performance contracting way. 

Mr. TONKO. Thank you, and as part of the effort to identify policy 

or regulatory barriers to investing in CHP, the Executive Order 

states that federal agencies will convene stakeholders to solicit 

their ideas and input. Is DOE involved in that list of agencies? 

Dr. HOGAN. Yes, if I am thinking about the same. So the Executive Order encouraged us to go out and engage any number of 

stakeholders around how to advance CHP. We are having a set of 

regional dialogues on this topic, the next one in a couple of weeks 

in Baltimore, around the things that we can do, and then we are 

also engaging in a report to Congress that was part of the energy 

bill passed this past December to do a much more detailed analysis 

around the barriers in the way of CHP and the things we can do 

to remove them. 

Mr. TONKO. I know that back in—I think it was ’98, a roadmap 

was developed to take the—to double CHP from, what was it, 46 

gigawatts to 92, in that neighborhood—— 

Dr. HOGAN. Yes. 

Mr. TONKO [continuing]. And they somewhat met that goal, that 

target deadline. Where do you believe the best opportunities exist 

today for deployment of CHP? 

Dr. HOGAN. I think we are at a very interesting point right now 

for CHP in that there are many, many, many opportunities, from 

large heat process type industries to smaller industries and into 

the residential and commercial sectors. I think you will hear from 

another panel member today on this topic, but I think also as we 

look at the post-Sandy period of time, there is a lot more interest 

in things that offer enhanced energy security linked to stave off the 

aftermath of these storms. 

Mr. TONKO. And in the midst of all of that, do you see a particular industrial sector that might be targeted for best retrofitting 

to CHP? 

Dr. HOGAN. So the industrial sectors that make the greatest 

sense are ones that have some amount of heat load, so again, that 

can be pretty broad. 

Mr. TONKO. In the efforts of the State of the Union for the race 

to the top for energy efficiency, how is that going to be developed? 

I am asking that from my perspective in the State of New York, 

which has been rather aggressive about doing energy efficiency. Do 

we get impacted for being a progressive State in regard to a baseline that might be well in advance of other States? How would we 

fare in that whole race to the top? 

Dr. HOGAN. So we will be happy to engage stakeholders in a conversation about how this program will be designed. At this point, 

the next point when there will be more information about this proVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
40 

gram will be in the rollout of the President’s budget, and then after 

that we will be happy to engage with you more directly. 

Mr. TONKO. I would just indicate a concern there that if you have 

done great work, you ought to be rewarded for that and continue 

to do more, and the consumers should not be held back or impacted—negatively impacted because of it. 

I am just about out of time. I was going to go into weatherization, but then let me just make a pitch for weatherization activities. Even though the stimulus did a great deal of investment to 

the good, I believe there is a lot of unfinished business and would 

strongly encourage that opportunity. Thank you very much. 

Mr. WHITFIELD. At this time, I recognize the gentleman from Nebraska, Mr. Terry, for 5 minutes. 

Mr. TERRY. Thank you, Mr. Chairman, and thank you for being 

here today. 

What is the biggest barrier to an increased use of the energy savings performance contracts by the Federal Government? The barriers that are of concern? 

Dr. HOGAN. I think one of the barriers is really just getting over 

the hurdle of having many different agencies go down this path. It 

takes a fair amount of knowledge to go and do that, and that is 

what the Federal Energy Management Program is set up to do. But 

just because we offer those services doesn’t mean people necessarily 

want them. And again, it is just because everybody is doing so 

much in their day-to-day jobs. And I think that is one of the barriers that the President’s Performance Contracting Challenge is 

really helping overcome. Challenging the agencies to commit to $2 

billion with energy savings performance contracting means each 

agency has its own goal and each agency is working through a set 

of projects to meet those goals. So I think we will have largely addressed that particular barrier by December 2013. 

Mr. TERRY. All right. On weatherization, you may have read 

some stories from my district where there were several million dollars issued for weatherization in the city, and it was something like 

14 or 15 homes that were actually provided the services. But yet, 

the money is gone. And so weatherization, at least in our area, is 

not a program that is held in high esteem. It is an example of the 

waste and fraud. 

So could you point out the internal DOE structure to oversee the 

weatherization program and to ensure that 80 percent of it, the 

dollars that are provided, aren’t being used for administrative purposes? 

Dr. HOGAN. Sure. First let me say that issues with weatherization really were the exception and not the rule, and there is a very 

comprehensive set of quality assurance procedures in place, on top 

of the fact that only a certain portion of the dollars can be used 

for administrative purposes. 

Mr. TERRY. And what percentage is that? 

Dr. HOGAN. I think it is about 20 percent. 

Mr. TERRY. Twenty percent is allowed for administrative purposes—— 

Dr. HOGAN. In all. 

Mr. TERRY [continuing]. And then the rest has to—— 

41 

Dr. HOGAN. Be put to work to improve low-income family homes. 

So yes. 

Mr. TERRY. And so when—how would—there were several stories 

in our local paper outing this scam. Do those rise up to—in DOE, 

do people catch those so you can begin an investigation, and how 

is an investigation into that type of waste and fraud—well, what 

triggers an investigation? Can you investigate that? 

Dr. HOGAN. Absolutely we can investigate that. Any time we 

hear of an issue, it is investigated and we do everything in our 

power to correct it and recoup any dollars that may have been misused. 

Mr. TERRY. Will you check for me and get back to me with what 

you have done on the Omaha situation with the waste and fraud 

in that program? 

Dr. HOGAN. We would be happy to do that. 

Mr. TERRY. Thank you. Yield back. 

Mr. WHITFIELD. Thank you, Mr. Terry. 

At this time, I recognize the gentlelady from California, Ms. Matsui, for 5 minutes. 

Ms. MATSUI. Thank you very much, Mr. Chairman. Thank you, 

Dr. Hogan, for being here. 

Energy efficiency is a key component for shifting our Nation towards a clean energy economy. We have made great progress in 

changing the way we use and conserve energy, but we need to do 

much more. I believe one area where we can make a significant impact is by providing sound financing mechanisms to individuals 

eager to make energy efficiency upgrades to their home. In fact, 

last fall in my district of Sacramento, we launched a revamped 

public-private partnership born out of the Recovery Act funds to 

encourage residential energy upgrades. 

The demand for residential energy retrofits is strong. Property 

Assessed Clean Energy, or PACE programs, are one approach to financing home retrofits. With PACE, homeowners can finance energy efficiency improvements without an upfront cost through a 

voluntary assessment on their property. Unfortunately, PACE programs have faced some major hurdles. 

Dr. Hogan, does DOE support innovative financing mechanisms 

that would help homeowners make these important upgrades? 

Dr. HOGAN. Yes, through our work at the Department of Energy, 

we are very supportive of innovative financing mechanisms and 

doing everything that we can to help pull out the lessons learned 

and share them with others, as well as working to help States and 

local governments continue to leverage and improve the effectiveness of the revolving loan funds that they were able to stand up 

with Recovery Act dollars. 

Ms. MATSUI. OK, now is there a way to get PACE programs back 

on track through administrative means? Are you or the White 

House still engaging FHFA to restore this program? 

Dr. HOGAN. I think what we have all heard from FHA is FHA 

would like more data to better understand how these loans perform, and so the Department of Energy is actively engaged in 

working with others to try and pull together the type of data that 

the finance industry needs to understand this loan performance. 

42 

Ms. MATSUI. So you are looking at probably similar approaches 

to facilitate this growing demand? 

Dr. HOGAN. Exactly. 

Ms. MATSUI. OK, great. 

Dr. Hogan, some have suggested that we don’t need government 

policies to boost energy efficiency. They say that if customers really 

wanted energy efficiency, the market will supply it. But my understanding is that there are a lot of market failures in this area. The 

classic example is the situation where the landlord has no incentive 

to weatherize an apartment because a tenant pays the utility bills. 

Dr. Hogan, could you please discuss some of the market failures 

that allow energy waste to persist, even when it could be cost effective to deploy efficiency measures, and are these market failures 

significant? 

Dr. HOGAN. I think we can see from the opportunity that we all 

talk about over and over with energy efficiency that there is a list 

of market barriers that hinder people from making what might be 

the economically rational choice, and that can just be that some of 

the more efficient products do cost a little bit more up front, even 

if they have a very attractive payback associated with them. And 

some of it is just hard to get the information so that you know 

what that payback would look like. So those are the types of things 

around which policies can be very helpful in helping people get 

these savings. 

Ms. MATSUI. Could you explain further on that what the policies 

might be? 

Dr. HOGAN. Better information and clearly, the reason we do appliance standards as well is because we can help consumers get the 

savings that are there from the more efficient products whenever 

there is a cost effective opportunity to do so. 

Ms. MATSUI. OK. I just also want to follow up on what my colleague from New York has talked about, about the race to the top 

for efficiency. You know, California has been involved in this a long 

time, since the ’70s with the grandfather of energy efficiency, Art 

Rosenfeld, and so we don’t want to be, in a sense, starting from 

baseline, which is artificial in a sense, so we would love to have 

that discussion with you. 

I have no further questions, so I yield the balance of my time. 

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

the gentleman from Louisiana, Dr. Cassidy, for 5 minutes. 

Mr. CASSIDY. I am going to defer to my gentleman—my colleague 

from Texas for a turn, please. 

Mr. WHITFIELD. Gentleman from Texas is recognized. 

Mr. OLSON. I than the chair, and good morning, Dr. Hogan. Welcome. I appreciate your time and expertise. 

One of the instances where energy is lost, regardless of the initial source, is in transmission. The wires we use are largely copper. 

They lose significant amounts of energy as they travel from place 

to place. Many people may not realize this because Texas is the 

number one producer of oil and gas, but we are the number one 

producer of wind in America. The problem with our wind is it is 

generated in the panhandle in western Texas. We need it in eastern Texas, Houston, Dallas, Ft. Worth, San Antonio, Austin—in 

some cases, 700 miles away. But University of Houston is trying 

43 

to change that. Having recently been named a Tier I research university and being led by an innovative and hands-on chancellor, Dr. 

Randy Coture, U of H has created an energy research park. One 

project that they are doing at the University of Houston energy research park is working on superconducting wires that are up to 20 

percent more efficient than current wires. This is not just an academic project. U of H intends to prove this works by rewiring their 

main campus with these superconducting wires. In true Texas tradition, they are going all in, putting their future—and more importantly, the future of over 300,000 students—on the line. Are you 

aware of this project being developed at the University of Houston 

energy research park? 

Dr. HOGAN. I personally am not, but it certainly does sound very 

exciting. 

Mr. OLSON. Well since you are not familiar with it, I would like 

to offer you a chance to come down and see it. I mean, if you have 

got some time, we go right here to Reagan International Airport, 

have a direct shot on United Airlines to Intercontinental Airport 

down in Houston. I would love to take you down there and see the 

energy research park. 

Dr. HOGAN. We would be very interested. 

Mr. OLSON. Earlier today I had a meeting with the people from 

ABS, which is the American Bureau of Shipping. One energy efficiency they are looking at is natural gas, in fact, liquid natural gas 

for transports of maritime vehicles. In fact, Nasco, the shipbuilder, 

is actually building their first project where one of the big ships 

will be powered by LNG, going to the Caribbean area and that part 

of the country. What do you think about that issue for energy efficiency, natural gas as opposed to traditional fossil fuels? 

Dr. HOGAN. Certainly we can have a conversation about that as 

well. 

Mr. OLSON. OK. Well one further question for you, ma’am. I 

mean, again, our biggest challenge right now—one thing we have 

in west Texas as well, getting to the Defense Department, they are 

being very innovative with their energy resources, their needs. Fort 

Bliss in El Paso, the largest base—the largest geographic base in 

America, is actually doing great things with solar because they 

have the sun out there. In fact, they are hoping to be actually a 

net exporter some time, getting energy off the base and helping 

local communities. I mean, that is one example of what the Federal 

Government can do, but again, my biggest concern, what I am 

hearing from back home, is let the market decide what the technology is. Don’t enforce some sort of technology from—so I ask your 

assistance going forward. Listen to the market and help us get this 

superconducting technology going on. Come on down and see it. I 

would really appreciate it. 

Dr. HOGAN. Terrific. 

Mr. OLSON. Thank you. Yield back the balance of my time. 

Mr. WHITFIELD. At this time, I recognize the gentlelady from 

Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman, and welcome. Secretary 

Hogan. Thank you for meeting with me a couple of months ago to 

advise on all the great things that are going on with energy efficiency. I think there is so much more to do all across the country 

44 

for families and businesses, so I encourage you to keep at it, and 

we can unleash the powers of American ingenuity and really empower families and businesses, and save money at the same time. 

I also wanted to thank you for your attention to the historic investments under weatherization. Under the Recovery Act, I think 

you said we were able to weatherize one million homes. And let me 

tell you what that means in my area, in the Tampa Bay area in 

Florida. That means that thousands of the folks that I represent 

are saving money on their energy bills, while at the same time, we 

created a lot of jobs. We created a lot of jobs in a time when the 

unemployment rate was really hurting families, and the legacy it 

has left is very important. Now our community colleges, with that 

investment, have ongoing weatherization training initiatives. They 

are still creating jobs, even though the money, the investments 

from the Recovery Act have tapered off. For families that struggle 

to get by, if they are able to save a few hundred dollars or a thousand dollars a year on their electric bill, that is very meaningful 

to them. That means they can do better at the grocery store, they 

can do better with other bills that come in. So thank you for your 

attention to that. 

Is all of the investments under the Recovery Act for weatherization, is that all invested now, or are States across the country still 

rolling out any of those monies? 

Dr. HOGAN. The vast majority of the Recovery Act dollars for 

weatherization is now spent, so yes, it is—— 

Ms. CASTOR. And what is the status of ongoing weatherization efforts? 

Dr. HOGAN. That is a good question. Right now, given the continuing resolution that we are now under, we are working hard to 

give the States the information they need to go into their next program. It is a little bit complicated because of the continuing resolution which continues the weatherization budget at a level well 

below where it had been historically—— 

Ms. CASTOR. It is just such a huge payback for the federal dollars 

that we can invest back home in our local communities that save 

our constituents money, so that money comes back to them, then 

we create jobs, and we are still kind of stuck at this 7.9 unemployment rate, and it is just difficult to watch the Congress self-inflict 

a wound and set us back at a time when the economy is getting 

better and I see great improvements and people are hiring. 

So we—that is our responsibility here, and I encourage my colleagues to think about that as these indiscriminate across-theboard cuts—this is an area that we should continue to invest in, 

because it has paid such great dividends across the country. 

And for my colleagues that worry about gas prices, I have to say, 

we are fortunate to be living through a time when we have made 

such progress in fuel economy for our vehicles. You know, I have 

a member of the family that bought—is leasing one of those electric 

vehicles. Since October, he has not visited a gas station. He has not 

purchased gas. I know my friends from Louisiana and the gas producing areas, they probably don’t like that, but you know how 

much money that is saving and how much that is saving families 

across the country? This is remarkable progress. It is saving consumers money. If you can buy a fuel-efficient vehicle, on average, 

45 

that means that $1,700 back in the pocket of consumers where they 

can spend it on their families or their small businesses. It helps 

with climate change because the carbon dioxide from burning gasoline and diesel contributes to the—to global warming and changes 

in the climate. It is reducing our oil dependence costs. Dependence 

on oil makes us vulnerable to oil market manipulation and price 

shocks. It increases energy sustainability. Oil is a non-renewable 

resource, and we cannot sustain our current rate of use indefinitely. So using it wisely and conserving is, frankly, just smart. 

Looking ahead, what are the challenges you see with fuel economy and lengthening the life of the batteries of these vehicles, and 

what are you optimistic about? 

Dr. HOGAN. I think we are very optimistic about what we can do 

across a whole set of vehicle technologies. Certainly I already spoke 

to the new research effort around electric vehicles and what we can 

do there to make them much more cost competitive over the next 

10 years, as well as convenient from the standpoint of the consumer, and then, of course, make available something along the 

lines of a dollar per gallon gasoline through electricity. 

I think we are also interested in what we can do with advanced 

combustion. We are doing a lot more there as well, and we think 

we will be very well-positioned to be working with U.S. auto manufacturers to meet the CAFE AE1 standards as they continue to 

ramp up in the coming years. 

Mr. WHITFIELD. The gentlelady’s time is expired. 

At this time, I recognize the gentleman from Louisiana—oh, Mr. 

McKinley from West Virginia for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman, and thank you for 

your patience, Dr. Hogan. 

Let us just start by saying I am very supportive of all the initiatives on energy efficiency, and as one of just two engineers in Congress, it is a delight to be able to try to work and improve that a 

little further. 

But I have got two questions for you. The GAO came out 2 years 

ago with a report that said there are 11 agencies handling green 

buildings or 11 agencies offering 94 separate initiatives, and they 

said that—by their own report, they are saying that we can benefit 

with more collaboration. Can you share with us briefly what you 

have accomplished over the last 2 years in either combining them, 

because with budget constraints right now, wouldn’t it make more 

sense instead of having 11 agencies handling green buildings to 

just a handful or fewer? Have you accomplished any of that? 

Dr. HOGAN. Yes, we are doing a lot of coordination across the federal agencies—— 

Mr. MCKINLEY. Different than what you were prior to 2 years 

ago? 

Dr. HOGAN. We are. I think we are getting more and more efficient as we go forward. I would also say, just going back to that 

GAO study, when you just count things it makes it look like there 

may be more duplication overlap than there may actually be, because I oversee the Federal Energy Management Program, which 

has an important role in engaging with each of the agencies with 

their senior sustainability officials around their work. 

46 

Mr. MCKINLEY. Could you get back to me, please, with some of 

the—what you have done to help consolidate, so that we can use 

the money—instead of doing it administratively, wouldn’t it make 

more sense if we could pass that on to the consumers in some fashion by reducing those costs at the Federal Government level? 

The second issue I have is a bit of a paradox. Someone at my 

former firm—we designed a lot of schools and a lot of public buildings, and we knew that often what the cost was for operation of 

an older building, because they didn’t meet all the new standards, 

the air quality and/or air quality standards. There was a cost that 

you can assume in the operation, but now under the new standards, new buildings are typically—for operational costs are increasing in costs primarily because of the standards that are set for 

fresh air to come into a classroom where you have to have four to 

twelve air changes per minute—per hour, as compared to where it 

had been before where we had—maybe sometimes where you had 

an individual unit, they would close the damper and there was no 

fresh air coming into Johnny’s classroom. So now we are introducing that. So we have a paradox. We are trying to improve our 

air quality and efficiency, but we are increasing costs to the consumer. How do you—how are you dealing with that? 

Dr. HOGAN. We certainly understand that issue and we are working to make sure that we are looking holistically at the costs for 

these buildings. Certainly we want to be promoting technology that 

meets our national objectives, but in a way that also keeps the 

costs in a good space for the people that have to pay those bills, 

and really offer the savings that are there to be gotten. So we are 

looking at the O&M costs. 

Mr. MCKINLEY. You do recognize, then, that the new standards— 

and I subscribe to them. I am in agreement with them because 

they are improving our indoor air quality, but they are raising the 

cost of operation. 

Dr. HOGAN. When you need mechanical ventilation there is a cost 

there, but I think when you look across everything that is going on 

in these buildings, you see that that can be done in a very low cost 

way. So you are delivering a much more lowe-cost building for people to be living in. 

Mr. MCKINLEY. Do you see—with these standards, do you accept—I guess I am building back off that same premise, because I 

am glad we are providing fresher air into that, but do you acknowledge that perhaps the old buildings—in some of these buildings, 

the indoor air quality wasn’t as good as it is today by what we are 

doing, by bringing in fresh air? 

Dr. HOGAN. I think that is a complicated question that requires 

a longer conversation. 

Mr. MCKINLEY. Stop by. I am over in Cannon. Let us see if we 

can’t follow up with that, because I think we have a dilemma here 

in Congress about indoor air quality versus outdoor air quality, and 

I would like to make sure we have a good discussion about that so 

when those asthma attacks that people refer to often perhaps are 

being caused by our indoor air quality and the fact that we are not 

adhering to the various codes and standards that have been set 

forth. So if you could please stop, I would like to do that very 

much. 

47 

Thank you very much. I yield back my time. 

Mr. WHITFIELD. Gentleman’s time is expired. 

Mr. Griffith, do you have any questions? Mr. Gardner? Dr. 

Cassidy? Dr. Cassidy is recognized for 5 minutes. 

Mr. CASSIDY. Good afternoon. 

Young families want the most square footage they can get in the 

place with the best school district. For them to invest in energy 

saving things which have only a payoff over 10 years really defeats 

that purpose, and so the way they are trying to scrape money together, how can I get the best square footage in the best school district if I invest $3,000 in which the payoff is only over 10 years, 

that is that many fewer square feet I can purchase. Does that 

make sense? You look quizzical, so I am not sure I am being clear. 

Dr. HOGAN. I understand what you are saying. 

Mr. CASSIDY. So really if we are talking about market mechanisms, it seems like much of what we discuss almost is by fiat, almost by definition, because really under the current way we finance mortgages, that family, again, has to make that tradeoff, less 

square footage or not as good a school district in order to have 

some of these things which we all agree would be wise for energy 

efficiency. Again, does that make sense? 

Dr. HOGAN. Yes, I think the way we have been looking at some 

of these home purchases is through the total cost of ownership, so 

if you look at the cost of a mortgage plus the cost of the energy 

bill—— 

Mr. CASSIDY. Now that, though, right now—we have investigated 

this. The cost of energy bill is not currently used by mortgage underwriters in terms of discerning someone’s ability to get a mortgage. So when you look at it, is that really impacting that young 

family with three kids trying to get the better home sort of thing? 

Dr. HOGAN. Yes, there is an issue as to where that young family 

is and how large a mortgage they can get and whether they are at 

that maximum level of a mortgage. But I think what we have seen 

in recent years is that hasn’t been the biggest barrier. 

Mr. CASSIDY. Now, I will tell you, when I saw—this came to 

mind last year because of Senators Isaacson and Bennet put forward their SAVE Act, we have been thinking the same concept, but 

when I spoke to bankers, they really do not include the energy cost 

in a mortgage, or somebody’s suitability. Frankly, we can’t talk 

about market mechanisms until we address this if we are thinking 

of that young family. Would you concede that, and if so, how do we 

proceed? 

Dr. HOGAN. Well I think we can proceed in a number of ways. 

One is let us continue to have the conversation on the role of energy bills, because certainly a lower energy bill does give a household more money to spend—— 

Mr. CASSIDY. But again, if the payoff is 10 years for that energy 

saving intervention, really, that family doesn’t look at that 10-year 

savings. Does that make sense? 

Dr. HOGAN. You mean because it is—— 

Mr. CASSIDY. They are on a cash flow basis. It is not as if they 

have got a lot of money in the bank that they can invest and see 

the payoff over 10 years. They are just now meeting their bills, and 

48 

anything that pays off over 10 years is probably not uppermost in 

their mind. 

Dr. HOGAN. There is the standpoint from the family. There is the 

standpoint from the banker, right, but from the standpoint of the 

family, if you have a more efficient home and you had to pay a little bit extra and it is rolled into your mortgage, as an example—— 

Mr. CASSIDY. Yes, but that doesn’t occur right now. 

Dr. HOGAN. But it can. Those mortgages are available. Energy efficient mortgages are available. Part of it is an access and awareness issue as opposed to—— 

Mr. CASSIDY. I would love to see that, because when I spoke to 

the bankers—we had some people come in because we were pursuing this—and the bankers said listen, we have a proprietary 

mechanism by which we determine if somebody is eligible—it is 

proprietary to our bank, not industry-wide, and we do not include 

this and we are not quite sure how. 

Dr. HOGAN. OK. 

Mr. CASSIDY. So if you have those, we would love it if you could 

see that. 

Do you have awareness of Isaacson and Bennet’s SAVE Act? 

Dr. HOGAN. I do. 

Mr. CASSIDY. What are your thoughts about that? 

Dr. HOGAN. I think in general we are very supportive of the goals 

of the proposals that can help motivate home improvements. 

Mr. CASSIDY. So let me just switch subjects. When I speak to 

home builders, they look at the regulations put out by DOE and 

they feel that sometimes something that is proscribed for one place 

wouldn’t apply in another. And little things, for example, in my 

State, in Louisiana, if you plant an oak tree on the west or south 

side, frankly, you will get a heck of a lot of benefit, but there is 

no kind of calculation in terms of that, in terms of the overall cost 

efficiency of a home. Their suggestion was that you bring in stakeholders coming up with metrics so that someone could pick and 

choose, saying listen, insulation really works well here. It is worth 

bang for the buck, and this other intervention cost me a heck of 

a lot of money, but I am not going to get a payoff for 20 years. 

Probably I will have sold the home by then. Any possibility of that 

sort of thing? 

Dr. HOGAN. I think there is a robust conversation ongoing 

through the codes organizations about a more performance-based 

path to get to an outcome in the least costly way. I think people 

are always interested—— 

Mr. CASSIDY. So they feel as if your DOE regulations, though, are 

not outcomes based but rather they are sort of you put in this 

amount of foam and this amount of this, and their criticism—and 

I have learned to say what I have been told, not what I know, so 

Dr. Hogan, you may say oh my gosh, you are totally wrong on this, 

but their criticism is that your standards are less performancebased and more ‘‘you shall put in 6 inches of foam’’ sort of thing. 

Dr. HOGAN. And both pathways are there. There are performance-based provisions in the codes. I wouldn’t quite call them our 

codes. These are codes that are created by model code authorities 

and the Department of Energy’s role has been to do an energy savings determination relative to those codes to show that they do 

49 

offer meaningful savings over the prior code, so they are a stakeholder-driven process to which the Department of Energy will also 

bring technical information to the table for consideration, which is 

why there is an ongoing venue through which we can have all of 

these conversations. 

Mr. CASSIDY. Thank you. Thank you, and I yield back. 

Mr. WHITFIELD. Gentleman’s time is expired. 

At this time, I am going to recognize the gentleman from New 

Hampshire as a valuable member of the Energy and Commerce 

Committee. He doesn’t happen to serve on the Energy and Power 

Subcommittee, and so he has waited patiently until the end, and 

now he is recognized for 5 minutes for questions. 

Mr. WELCH. Mr. Chairman, I thank you very much, Mr. Ranking 

Member. By the way, having this hearing on efficiency this early 

in our congressional term is tremendous, so I want to thank you 

and I think all of do. 

In listening to this and talking to my colleagues, a couple of 

things. Number one, there does seem to be strong bipartisan cooperation and leadership on efficiency, and then second, there is 

really three questions that this committee has got to sort through, 

I think. Number one, what can the government do on its own. Congressman Gardner and I are really focused on these energy saving 

performance contracts, and I want to come back to this, but that 

is completely within the ability of government on its own to do useful things to save the taxpayer money, and also make a contribution to cleaning up our environment. 

Second, there is a question of what can private citizens and companies do on their own? And I know Congressman Burgess has 

been very much—on his own personal situation, very much focused 

on energy efficiency and has some skepticism about steps that government takes that are either unnecessary or get in the way. Those 

are fair questions, and I hope our committee will ask those so that 

it ends up that we do is helpful and doesn’t get in the way of what 

private sector folks can do on their own. 

But then third, there are areas where it is possible for the private sector and the public sector to cooperate and then leverage the 

partnership to be successful. Congressman McKinley and I are 

working on efforts to try to provide incentives to homeowners to be 

able to do things that otherwise they would not be able to do. 

So this is really just a plea to some extent to our committee that 

even though there will be a lot of legitimate questions raised on a 

practical level about what is the government role, what is the private role, what is the partnership role, I hope we will sort through 

those questions to have as the outcome, Mr. Chairman, productive 

steps that will allow the taxpayer and a company and the individual to save money. And this initial hearing is really helping us 

on our way. 

I do want to talk to you about the energy saving performance 

contracts that I mentioned Mr. Gardner and I are really quite focused on. The President had a goal of $2 billion. I mean, what is 

better than being able to get a company to sign up and be paid essentially by sharing in the savings? How is that coming along, and 

is it possible, if this is successful, that reports I hear, that there 

50 

could be up to $20 billion in savings that we could expand this effort? 

Dr. HOGAN. Yes, so this was announced a little over a year ago, $2 billion, and then each agency took on a goal that adds up to that 

$2 billion, and the agencies are moving forward to put those 

projects in place and sitting here today, we are on track to meet 

that $2 billion savings goal by December 2013, which indeed is 

very exciting, and I think that will allow the agencies to step back 

and work with the White House to hopefully come up with a phase 

two to this effort, but it is probably a little premature to say what 

that would look like. 

Mr. WELCH. And how about the utility performance contracts, 

the private sector efforts by our utility companies? 

Dr. HOGAN. So this challenge by the President included both 

ESCOs as well as the utility energy savings contracts, and those 

are in this mix as well. 

Mr. WELCH. OK. Dr. Cassidy has left, but I was listening very 

carefully to his concern about performance-based approach. 

Vermont does have—I think we are the only State that has an energy savings utility, and it is because there has been a sense in 

Vermont that the best—the cheapest electricity and the—is the 

unit of electricity that we don’t utilize. But the performance-based 

approach does seem to make an awful lot of sense to the Vermont 

electricity efficiency utility. How about to you? 

Dr. HOGAN. So I think performance-based approaches really do 

make sense for all the reasons that people were raising earlier. You 

are not trying to pick a technology, you are trying to get to an outcome. So I think conceptually it really does make sense. 

I think the flip side of it is when builders are building a home, 

a lot of them say we just want to know what to do in this region 

that is going to meet that performance-based approach. They don’t 

want to be doing detailed—— 

Mr. WELCH. So you would be glad to work with the committee 

or folks like Dr. Cassidy to focus on that performance-based outcome? 

Dr. HOGAN. Yes. 

Mr. WELCH. OK, thank you. 

Thank you very much, Mr. Chairman. I yield back. 

Mr. WHITFIELD. Peter, I knew you were from Vermont. I am 

sorry, I said New Hampshire. 

Mr. WELCH. Well, that is OK, but—— 

Mr. WHITFIELD. We are glad you are here. 

Mr. WELCH. Thank you. It is good to be here. 

Mr. WHITFIELD. Well, that concludes the testimony of Mrs. 

Hogan and questions for her, so Dr. Hogan, thank you so much for 

being with us today. We look forward to working with you as we 

continue forward. 

At this time, I would like to call up the third and final panel. 

On the third panel, we have Mr. Kevin Kosisko, who is Vice President Service, North America ABB, and he is testifying on behalf of 

the National Electrical Manufacturers Association and the Industry 

Energy Efficiency Coalition. We have Ms. Britta MacIntosh, who is 

Vice President of Business Development, NORESCO, who is testifying on behalf of the Federal Performance Contracting Coalition. 

51 

We have Mr. James Crouse, Executive Vice President of Sales and 

Marketing, Capstone Turbine Corporation, who is testifying on behalf of the U.S. Combined Heat and Power Association. We have 

Ms. Ellen Burt, Senior VP and Chief Customer Officer, Pacific Gas 

and Electric Company. We have Mr. Neal Elliott, Associate Director for Research, American Council for Energy Efficient Economy, 

and we have Mr. Ted Gayer, Co-Director, Economic Studies and Joseph Pechman Senior Fellow at the Brookings Institution. 

So I would like to welcome all of the members of this panel. 

Thank you for your patience, and thanks for agreeing to join us 

today to give us your views, thoughts, and expertise on this important subject. As you know, each one of you will be given 5 minutes 

for your opening statement, and I would remind you to just be sure 

that your microphone is on. You will notice a couple of boxes on 

the table in which—when it is green, it means talk. When it is red, 

it means stop, but we frequently go over, so—but anyway, welcome 

and we will begin with you, Mr. Kosisko. 

Mr. KOSISKO. Kosisko. 

Mr. WHITFIELD. Kosisko. We will begin with you, and you are 

recognized for 5 minutes. 

STATEMENTS OF KEVIN C. KOSISKO, VICE PRESIDENT SERVICE, NORTH AMERICA, ABB, INC., ON BEHALF OF NATIONAL 

ELECTRICAL MANUFACTURERS ASSOCIATION AND INDUSTRIAL ENERGY EFFICIENCY COALITION; BRITTA MACINTOSH, VICE PRESIDENT, BUSINESS DEVELOPMENT, 

NORESCO, ON BEHALF OF FEDERAL PERFORMANCE CONTRACTING COALITION; JAMES CROUSE, EXECUTIVE VICE 

PRESIDENT OF SALES AND MARKETING, CAPSTONE TURBINE CORPORATION, ON BEHALF OF U.S. COMBINED HEAT 

AND POWER ASSOCIATION; HELEN A. BURT, SENIOR VICE 

PRESIDENT AND CHIEF CUSTOMER OFFICER, PACIFIC GAS 

AND ELECTRIC COMPANY; R. NEAL ELLIOTT, ASSOCIATE DIRECTOR OF RESEARCH, AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY; AND TED GAYER, CO–DIRECTOR, ECONOMIC STUDIES AND JOSEPH A. PECHMAN SENIOR 

FELLOW, THE BROOKINGS INSTITUTE 

STATEMENT OF KEVIN C. KOSISKO 

Mr. KOSISKO. Chairman Whitfield, Ranking Member Rush, and 

members of the subcommittee. Thank you for allowing me to testify 

on the successes and opportunities for energy efficiency in the industrial sector. 

I am Kevin Kosisko, Vice President of Services for ABB in North 

America. I oversee services for asset management, process safety 

and industrial energy efficiency, as well as maintenance operations 

for ABB in the U.S., Canada and Mexico. 

By way of background, ABB is a Fortune 500 producer of power 

and automation products and services. We employ 147,000 people 

in over 100 countries, providing energy efficient solutions for our 

industrial, utility, and government customers. 

I am honored to be here representing the National Electrical 

Manufacturers Association (NEMA) and the Industrial Energy Efficiency Coalition (IEEC). 

52 

NEMA is the trade association of electrical equipment and medical imaging manufacturers. Its member companies produce everything from power transmission and distribution equipment to lighting systems, factory automation and controls and medical diagnostic imaging systems. 

The IEEC is a coalition of six of the largest global industrial automation and control system companies. Those companies are 

Eaton Corporation, GE, Rockwell Automation, Schneider Electric, 

and Siemens, in addition to ABB. We are technology providers that 

industry uses to make their processes more energy efficient, reduce 

costs and increase competitiveness. 

ABB and IEEC believe that energy efficiency is the cheapest, 

cleanest alternative fuel. It drives competition and industrial success, and the good news is that there are proven, available technologies that are already having an impact. My written statement 

offers examples of energy efficiency successes and case studies from 

each member of the IEEC. Yet together, our examples barely touch 

the breadth of current deployments and future possibilities. 

A recent survey of manufacturing executives demonstrates their 

understanding of the importance of energy efficiency and the impediments to its use. Executives report basing their energy efficiency investment decisions on cost benefit analyses and the price 

of energy far more than other considerations. Regulatory compliance was a distant third. Yet fewer than 40 percent of those surveyed had invested in efficiency in the past 3 years. In the U.S., 

the situation is even starker with only 21 percent having invested 

in equipment to improve energy use in the last 3 years. The majority of those were in highly energy-intensive manufacturing industries such as mining, metals, chemical production, and petroleum 

refining. This gap between awareness and action was attributed to 

three key factors. Nearly half of the respondents cited the lack of 

clear business case as a reason for inaction. Twenty-eight percent 

identified inadequate funding or financing as a critical barrier, and 

a lack of adequate information on efficiency options was reported 

as the third greatest obstacle by 27 percent of those executives surveyed. 

These responses point to the need for further education, 

benchmarking, and identification of available technologies and/or 

application, and to the importance of access to funding or financing 

to enable investments. 

Encouraging the efficiency enhancements needed to ensure our 

competitiveness will require both industry’s and government’s involvement. We must supply the missing information and provide 

the necessary funding. At ABB and the IEEC, we are striving to 

do just that. We work continually to educate manufacturers on 

available technologies and industrial best practices. We train engineers, assessors, and finance teams to provide accurate, reliable energy audits, and estimates on return on investment. We provide directly or assist in securing necessary financing, and we invest in 

ongoing research and development to continue innovation. 

In the areas of industrial energy efficiency, government has historically focused on reducing consumption in energy-intensive industries. While these industries represent a major portion of potential energy savings, the public sector has the ability to expand the 

53 

visibility of conservation opportunities to industrial players both 

large and small. Hearings like this, well-informed Department of 

Energy and Environmental Protection Agency activities, and federal support for research, audit, and deployment programs all raise 

awareness of the availability and value of energy saving technologies. This is particularly true for the small and mid-sized companies with less knowledge of or expertise in newer efficiency tools. 

Tax policies and other incentives can encourage investment. Advanced systems that deploy networks of sensors, controls, and automation to achieve significant energy savings can benefit from incentives to provide a faster rate of return. 

Government is unique in its ability to support basic science and 

energy research, and State governments have the principle role in 

setting the grid investment policies and utility rate structures that 

enable deployment of critical line loss reduction, power quality 

management, and grid reliability technologies like Volt/VAr optimization. 

There is no doubt of the ability of the U.S. industry to compete 

and succeed. America’s competitive edge is the high level of productivity of our workers and the technologies and processes we deploy 

to secure greater output from fewer resources, including energy. At 

ABB, at NEMA, and at the IEEC, we work daily to support that 

effort. 

Mr. Chairman, thank you for the opportunity to testify. I would 

ask that a copy of our latest energy efficiency white paper be included in the record, and I am happy to answer any questions the 

committee might have. 

[The prepared statement of Mr. Kosisko follows:] 

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Mr. WHITFIELD. Thank you. It will be included in the record. 

Ms. MacIntosh, you are recognized for 5 minutes. 

STATEMENT OF BRITTA MACINTOSH 

Ms. MACINTOSH. Good afternoon, Chairman Whitfield and members of the subcommittee. 

Mr. WHITFIELD. Is your microphone on? 

Ms. MACINTOSH. Yes, sir. Can you hear me now? 

I am Britta MacIntosh, Vice President of Business Development 

for NORESCO, one of the largest energy service companies in the 

United States. NORESCO is part of UTC Climate, Controls and Security Systems, a unit of United Technologies Corporation, a leading provider to the aerospace and building systems industry worldwide. Thank you for the opportunity to appear to you—before you 

today on behalf of the Federal Performance Contracting Coalition. 

The FPCC is a coalition of energy services companies that, like 

NORESCO, implement projects that reduce federal spending on energy and maintenance using private sector funding. Our work is 

conducted using energy savings performance contracts, or 

ESPCs—— 

Mr. RUSH. Would you please speak into the mike? 

Ms. MACINTOSH. Our work is conducted using energy savings 

performance contracts, or ESPCs. Since the 1990s, ESPC projects 

have reduced waste in federal utility bills. Across the industry, 

more than 570 comprehensive energy projects have been implemented by 25 federal agencies, creating $13 billion in guaranteed 

energy cost savings, and eliminating over 32 trillion BTUs of annual energy demand. By using performance-based contracting to 

upgrade facility infrastructure, we deliver energy and maintenance 

savings to government and private sector entities. Performancebased contracting means our company’s compensation is tied to the 

realization of savings for the projects we install. In other words, if 

we don’t perform, we don’t get paid. At NORESCO, our projects 

have delivered more than $3 billion in facility improvements at 

more than 2,000 sites. 

An ESPC redirects inefficient spending on energy into needed infrastructure improvements that conserve energy and dollars. Under 

an ESPC, energy services companies engineer and install upgrades 

for outdated and inefficient equipment financed by the energy services company and at no upfront cost to the government. An agency 

will repay the government over time—the company over time with 

funds saved on utility costs. The projected energy savings are guaranteed upfront by the company and are measured and verified during the contract period. At no time does the government pay more 

than it would have paid for utilities, had it not entered into an 

ESPC. 

In 2010, for example, NORESCO, working together with the architect for the Capitol, modernized the heating, cooling, water, temperature control, and lighting systems here in the Rayburn Building, and then also in the other House office buildings. This project 

has cut Congress’s energy and water bills by more than $3.2 million annually. 

The Federal Government is the Nation’s largest energy consumer, costing taxpayers over $7 billion annually. An aggressive 

96 

government-wide effort to eliminate energy waste in buildings 

could easily cut that number by 20 percent or more. 

Despite the opportunity to better steward the taxpayer’s investments in public facilities, several difficult obstacles stand in the 

way. I would like to talk about three of those. 

First, there is a lack of compliance with existing congressional 

mandates. In 2010, Congress directed agencies to audit their facilities to identify energy and water projects that would pay for themselves within 10 years or less. Currently, it is not clear where agencies stand on this audit process, because those comprehensive reports requested by Congress have not yet been delivered. Even less 

clear is where agencies stand on implementing the energy savings 

measures these audits have also identified. This information is critical to understanding how much taxpayer money is being wasted 

through inaction and inattention. 

Second, there is a lack of an apples to apples comparison between the use of appropriations and private sector investment to 

provide agencies and Congress with the information needed to 

make good decisions. Oak Ridge National Laboratory has outlined 

in multiple studies that facilities which use appropriated funds to 

replace outdated equipment failed to properly budget for the ongoing maintenance of the new equipment. ESPCs require the provision of ongoing maintenance and savings verification to ensure that 

long-term persistence of savings and proper operation of the equipment is achieved. In 2007, Congress also directed agencies to implement a uniform approach to maintenance and savings 

verification to ensure that the government realizes the promised 

savings from any efficiency upgrades, although most agencies have 

appeared to ignore this direction for appropriated projects. We recommend that you ask how agencies—that you ask agencies how 

and when this simple requirement will be implemented for all efficiency projects, regardless of how they are funded. 

Third, the current approval process for ESPC contracts is excessive, with multiple redundant layers of review in many agencies. 

Officials with limited knowledge of the facility, project, or recommended technologies are often required to review and sign off on 

projects before they can proceed. Congress should push agencies to 

streamline their review process, allowing more projects to begin 

generating savings more quickly. 

In order to confirm that we are making true progress toward 

meeting our Nation’s energy and efficiency goals, Congress needs 

to complete—needs complete information about available energy 

savings opportunities at our agency’s facilities, each agency’s plans 

for implementation, and full transparency and accountability on all 

spending related to efficiency projects. We recommend that you 

take appropriate steps to ensure that prior congressional direction 

on these items is acted upon. 

Thank you again for your time and attention. I will be glad to 

answer any questions that you have. 

[The prepared statement of Ms. MacIntosh follows:] 

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Mr. WHITFIELD. Thank you, Ms. MacIntosh. 

Mr. Crouse, you are recognized for 5 minutes. 

STATEMENT OF JAMES CROUSE 

Mr. CROUSE. Can you hear me? 

Thank you. Chairman Whitfield, Ranking Member Rush, and 

distinguished members of the committee, my name is Jim Crouse 

and I am the Executive Vice President of Sales and Marketing for 

Capstone Turbine Corporation. 

Capstone is the world’s leading producer of low emission microturbine systems. A microturbine is a small, fuel-flexible, typically 

sized 1 megawatt and below, and can be best described as a jet engine in a filing cabinet sized box. Other forms of combined heat and 

power, or CHP, we are able to provide either base load or backup 

power to deficiencies exponentially greater than the grid. 

I am delighted to be here today to testify on behalf of the U.S. 

Combined Heat and Power Association. USCHPA is a non-profit 

trade association formed in 1999 to promote deployment of CHP 

systems in the United States through education and advocacy. 

I am going to speak today about the opportunity for natural gasfired CHP and the barriers to greater deployment of CHP that policy makers can address. 

Currently, there are 82 gigawatts, or about 7 percent of all U.S. 

generating capacity produced by CHP systems. The technical potential for additional CHP from existing sites in the U.S. is approximately 130 gigawatts, or 12 percent of the U.S. generation capacity. This is readily available capacity, provided policies are established to support further CHP deployment. Access to low cost 

U.S. natural gas resources makes supporting CHP a no-brainer, 

and is an easy route to lower emissions across the United States. 

Microturbines and other CHP systems are used by customers 

throughout the world in a variety of applications. Just to name a 

few examples, they can be used in onshore and offshore oil and gas 

sites, like the many transmission sites in Mr. McKinley’s district, 

offshore platform in Mr. Scalise’s district, military applications like 

the one at MacDill Air Force Base, offices like our government office project in Mr. Olsen’s district, multi-unit residential buildings, 

hospitals, like the VA hospital in Mr. Dingell’s district, schools and 

universities like—school in Ms. Capps’s district, factories like 

American River Packaging in Ms. Matsui’s district, hotels and 

other commercial sites like Proctor’s theater in Mr. Tonko’s district, 

and wastewater treatment plants, like the plants in Mr. Griffith’s 

district and Ms. McMorris Rodgers’s district. 

As referenced in my prepared remarks, CHP generally and Capstone specifically offers customers reliable off grid power that as 

witnessed during Superstorm Sandy provides critical power and 

thermal energy to hospitals, nursing homes, shelters, and data centers. 

Despite these opportunities, our company and the CHP industry 

continue to encounter numerous regulatory economic barriers that 

prevent greater deployment. There are pragmatic, cost effective solutions that policy makers can champion to mitigate these issues. 

To begin, we would like to see greater top level leadership from 

the government. While the recent Executive Order calling for 40 

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gigawatts of new CHP is helpful, we would be better served if the 

government were to lead by example through increased procurement of CHP to meet federal energy efficiency goals. Additionally, 

as the EPA implements Boiler MACT, CHP should be strongly encouraged as a compliance strategy for those currently burning coal 

or oil. As part of this process, facility managers faced with compliance can seek site-specific technical and cost information from the 

DOE’s clean energy assistance centers. Similarly, we hope States 

will look to EPA’s guidance on output-based emission regulations, 

which unlike input based standards, recognize both efficiency and 

pollution prevention benefits of CHP. Output-based standards encourage cost effective long-term pollution prevention through efficiency. Likewise, we were glad to hear FERC proposed reforms to 

small generator air connections. Interconnection continues to be a 

barrier, but we continue to work with our friends in the utility industry to demonstrate the benefits that CHP provides for the grid 

and for consumers as a clean, reliable, distributor resource. In addition, both States and utilities should include CHP in their energy 

planning policies. The CHP industry is eager to be an active stakeholder and support a fair, interconnected standards in CHP rates. 

Finally, we note that there are several technologies that currently benefit from government support through various levels of 

an investment tax credit. We believe the lack of parity in support 

levels for decentralized and renewable energy technologies blur the 

marketplace. We support parity in the treatment of various types 

of clean energy sources, and would encourage a focus on performance-based measures to best spur market competition. 

To wrap up, let me highlight again the opportunity exists today 

to generate clean, reliable power through CHP systems at existing 

industrial commercial sites across the United States using U.S. 

natural gas. We appreciate your help in overcoming these barriers 

that exist to greater deployment of our innovative U.S.-made technology. 

Thank you for the opportunity to testify at today’s hearing, and 

I look forward to answering any questions you may have. 

[The prepared statement of Mr. Crouse follows:] 

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Mr. WHITFIELD. Thank you, Mr. Crouse. 

Ms. Burt, you are recognized for 5 minutes. 

STATEMENT OF HELEN A. BURT 

Ms. BURT. Thank you. Good afternoon, Chairman Whitfield, 

Ranking Member Rush. Let me begin by thanking you and members of the committee for this opportunity to testify today. I am 

Helen Burt, Chief Customer Officer for Pacific Gas and Electric 

Company. 

PG&E is one of America’s largest combined gas and electric utilities. We serve about 15 million people in northern and central California, and over the last 30-plus years, together with the State of 

California, we have helped customers achieve extraordinary benefits when it comes to energy productivity. 

For us, these efforts are about being smarter when it comes to 

using energy. They are not about making do with less. They are 

about doing more with the energy we consume, helping customers 

get the most value of their energy dollars. Working as partners, 

utilities and our State policy makers have been able to support and 

encourage innovation and adoption of new technologies, and we 

have developed the most successful customer energy efficiency programs in the country. 

Sometimes we are working with the end use customers like 

homeowners or small business owners. Other times we are moving 

further up the value chain, working directly with manufacturers, 

distributors, retailers, and contractors. The point is, we take a comprehensive approach and the results reflect that. 

If you look just at PG&E since our programs began some 30-odd 

years ago, the customer savings have been more than $20 billion. 

We have also avoided the need to build more than 25 power plants, 

saving all our customers money and providing tremendous environmental benefits. 

What is remarkable is that the potential gains look even greater 

today, thanks to the growing intersection between IT and energy. 

Technologies like SmartMeters are creating huge new opportunities. By enabling two-way communications on the grid, they are 

opening the door for wider adoption of advanced technologies like 

electric vehicles, smart thermostats, and other energy management 

tools. But most significantly, they are giving people more control 

over their energy bills. PG&E customers can now get near real 

time information on their energy usage. Last year, we were able to 

create an online tool called the Green Button, which allows them 

to download that data. They can then use various apps to help 

them understand and then come up with options to achieve savings. 

As significant as the potential is to achieve further gains, we 

need the right policies. These include constructive tax policies, support for research, development, and deployment, supportive regulatory and rate structures, codes and standards, and programs that 

empower consumers and help companies share best practices. As 

you and others in Congress consider ways to help drive further 

progress, I would to highlight several areas where our experience 

shows you can have the greatest impact. 

115 

One is encouraging regulatory approaches that incent utilities to 

pursue efficiency. Many utilities still face strong disincentives, 

changing this one key to success. At PG&E, we now treat energy 

efficiency projects as a resource, just like we do new traditional 

generation facilities. 

Another area is improving regulatory consistency. Programs 

work best when everyone can operate from a consistent set of policies that they can count on for longer periods of time. That way, 

they can make multi-year commitments to support commercialization and deployment efforts. 

We also recommend encouraging consistent and clear methods 

for measuring and verifying the results of energy efficiency 

projects. 

A third area is encouraging public-private cooperation between 

utilities and government. For example, PG&E manages energy efficiency turnkey projects for federal customers through our Utility 

Energy Services Contracts Program. One effort now underway at 

the NASA Ames Research Center is expected to save more than 

$1.5 million annually in water and energy costs. Nationally, UESC 

projects are saving taxpayers roughly $400 million a year. We 

should continue to encourage these efforts. 

Finally, a fourth area is building codes and appliance standards. 

These provide a foundation for other energy efficiency efforts, and 

drive new technologies, programs, and practices. 

Our hope is to work collaboratively with many members of this 

committee, who are already exchanging good policy ideas around 

energy productivity. New ideas and approaches will evolve just as 

quickly as the technology around us. As PG&E in California has 

demonstrated, energy efficiency can save money, spur innovation, 

provide consumers with more choices, and make our economy more 

productive and benefit the environment. 

Thank you again for this opportunity. I look forward to answering your questions. 

[The prepared statement of Ms. Burt follows:] 

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Mr. WHITFIELD. Thank you. 

Mr. Elliott, you are recognized for 5 minutes. 

STATEMENT OF R. NEAL ELLIOTT 

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

Rush, members of the committee. I appreciate the opportunity to 

speak today. My name is Neal Elliott. I am the Associate Director 

for Research at the American Council for an Energy Efficient Economy, frequently called ACEEE. We are a private, nonprofit, nonmember research institute based here in Washington, D.C. 

As Ranking Member Rush said in his opening remarks, ACEEE 

has looked at the impact of energy efficiency on the U.S. economy 

and found it to be a significant contributor to economic growth over 

the last 40 years. In particular, I would note that as has been 

noted by many of the witnesses so far today, energy efficiency represents the least cost energy resource in the U.S. economy, and a 

recent analysis suggests that in 2010 it contributed about half as 

much as all of the conventional resources to the U.S. economy. 

I mentioned in my written testimony five areas that we think the 

committee should consider for action in the coming Congress, and 

wanted to focus three of those in my oral remarks. 

The first, which is has come up several times, is appliance standards, and I wanted to mention that since 1987, with the passage 

of the EPCA, Energy Policy Conservation Act, energy standards 

have saved 3.4 quads of energy and that the standards that are in 

place today are projected to save $1.1 trillion through 2035. 

We have many other standards that are currently in development, and I wanted to bring to the attention of the committee that 

one of the important ways that these are being developed now is 

through a negotiated process in which the energy efficiency advocates, people—stakeholders such as PG&E and other utilities, and 

the manufacturers come together to develop consensus proposal. 

The Energy Policy Act of 2005 enabled DOE to accept those consensus standards directly into rule and we have begun to see that 

move forward in the process. There are a number of negotiations 

that are currently underway. In the past, these negotiations have 

been enacted as part of the federal energy legislation, and we hope 

the committee will consider several of the provisions that are currently under development, as they look at legislation. This is a very 

efficient and effective way to bring consensus between the manufacturers and stakeholders, and move the market forward together. 

Second issue I wanted to raise to the committee is building codes. 

As has been noted, buildings consume approximately 40 percent of 

the energy in the U.S. economy, and codes represent the easiest 

and most cost effective way for consumers to benefit from energy 

efficiency. It is important that we continue to revise and look at 

best practices that exist in terms of building codes, but it is also 

equally important that we focus on the implementation of the 

building codes in the marketplace. A building code on the books 

means nothing if the builders out there in the market are actually 

not implementing it, and we would encourage DOE to work with 

State and local governments to build the capacity, both within the 

enforcement side of this, but also work with the contracting comVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00133 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
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munity and building community out there to implement the codes 

so that the energy efficiency benefits are available to all customers. 

Finally, the last area I wanted to speak about is manufacturing. 

U.S. manufacturing sector is poised for a major expansion and reinvestment, and until recently, has not received a lot of attention at 

the federal level. In particular, we would recommend three things 

the Department should—the committee should consider. 

First, we think it is important that the DOE’s manufacturing 

program be reenergized. There has been a lack of leadership for 

over a decade there, and we think there is some opportunities for 

it to move forward. Specifically, we would recommend that the Department be directed to establish an industrial steering committee 

to ensure a strong working relationship exists between manufacturers, the Department, and other stakeholders, and that that partnership should work to leverage private sector funding. In the past, 

this program R&D area has been among the most successful R&D 

efforts in the entire Federal Government, and was able to leverage 

$3 in private sector funding for every $1 that was spent by the 

Federal Government. 

Second, we think it is important to maintain a balance between 

your term R&D, long-term R&D, and deployment, and all of these 

need to be targeted in cooperation with the manufacturers so that 

we receive maximum efficiency. 

Finally, I wanted to mention the idea of smart manufacturing. 

This is—as we look, we have already mentioned intelligence in the 

marketplace. We think manufacturing will benefit from that and 

encourage you to direct the Department to initiate a smart manufacturing program to explore those resources. 

Thank you for the opportunity to present, and I look forward to 

questions. Thank you. 

[The prepared statement of Mr. Elliott follows:] 

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Mr. WHITFIELD. Well thank you, Mr. Elliott, and Mr. Gayer of 

the Brookings Institution, you are recognized for 5 minutes. 

STATEMENT OF TED GAYER 

Mr. GAYER. Great, thank you. Chairman Whitfield, Ranking 

Member Rush, and members of the subcommittee, thank you very 

much for the opportunity to appear here today. My comments will 

cover the market incentives for energy efficiency innovation, the 

most cost effective means of reducing pollution stemming from energy use, and the limitations and problems associated with government energy efficiency mandates. 

First on market incentives. I believe that market prices are good 

at conveying information about the strength of consumer demand 

for a good, and the scarcity of supply for that good, allowing for a 

balancing of buyers and seller’s interest. In the market for appliances, prices reflect how consumers value features such as energy 

efficiency and convenience. If the price of energy increases, consumers are willing to pay more for more efficient appliances, providing a clear incentive to suppliers to respond. The importance of 

energy prices for the bottom line of consumers and businesses provides a strong incentive for producers to provide the innovative energy efficient products we see arriving on the market today, and 

these market incentives account for the preponderance of energy efficiency gains that have been mentioned in this hearing today. 

In addition to providing incentives for energy efficiency, another 

important benefit of the market process is that consumers with different preferences can find products that best suit their needs. It 

is important to remember that there is no uniformly right amount 

of energy efficiency for any given product. However, market prices 

can provide misleading signals, to the extent that they do not account for the pollution costs stemming from energy use. In other 

words, the price that shows up on one’s electric bill accounts for the 

private cost of energy, but it does not include any environmental— 

additional environmental damages that impact others due to one’s 

energy use. Economists refer to these latter costs as ‘‘negative 

externalities.’’ The best approach to addressing this problem is for 

the government to price these costs directly. Consumers and businesses would then face the full cost of energy use and markets 

would respond through some combination of new technologies, alternative fuels, and conservation. 

There are a number of reasons why this market-oriented approach of setting a price on pollution is more cost-effective than 

regulations such as energy efficiency mandates. First, the one-sizefits-all energy efficiency mandates ignore the substantial diversity 

of preferences, financial resources, and personal situations that 

consumers and businesses must align in order to make their decisions. Second, energy efficiency mandates do not promote conservation. For example, an energy efficiency standard for air conditioners increases the incentive to run the air conditioners longer. 

Third, energy efficiency standards must squeeze energy reductions 

out of new products only, and can even create incentives for consumers and businesses to retain older, and thus less energy-efficient, products. 

145 

In recent work I did with Kip Viscusi of Vanderbilt University, 

we examined a number of recent government regulations that mandate energy efficiency standards for vehicles and appliances. Despite the fact that these regulations frequently are touted as pollution-reducing initiatives, by the agencies’ own estimates, they confirm that the environmental benefits tend to be quite small and are 

often outweighed by the costs that they estimate. 

In order to justify these regulations, the agencies assert that consumers and firms are making incorrect purchase choices and that 

they therefore benefit if product choices are restricted to those that 

meet the agencies’ mandated standards. Dismissing consumer preferences outright in this way is a significant departure from the 

well-established principles for conducting cost-benefit analyses, 

both in the economics literature, and I would add, by the Administration’s Office of Management and Budget. 

By claiming regulatory benefits from the correction of so-called 

‘‘consumer irrationality,’’ agencies are shifting regulatory priorities 

from the important goal of reducing the harm individuals impose 

on others, through pollution, towards the nebulous and unsupported goal of reducing harm individuals cause to themselves by 

purchasing purportedly uneconomic products. This shift from environmental protection to consumer protection results in a host of 

costly regulations that are far less effective than a government policy that simply sets a price on pollution. It is important to emphasize that these costs are real and that they harm economic wellbeing. Raising the costs of consumer products and products used by 

businesses through government mandates does not lead to economic growth or job creation. It also establishes a dangerous precedent: If agencies can justify regulations on the unsubstantiated 

premise that consumers and businesses, but not the regulators, are 

irrational, then they can justify the expansive use of regulatory 

powers to control and constrain virtually all choices consumers and 

businesses make. 

To summarize, I believe that markets generally work well to provide incentives for energy efficiency and to satisfy consumers’ diverse tastes. To the extent that prices fail to incorporate the environmental cost of energy use, the most sensible government response is to price the pollution costs directly, and then allow consumers and businesses to respond to the higher prices. Regulations 

and mandates are inferior policies, but still may be better than 

doing nothing if the benefits exceed the costs. Unfortunately, by the 

agencies’ own estimates, many of these mandates lead to minimal 

environmental benefits that are far less than the costs that they 

estimate themselves. In an effort to justify these regulations, the 

agencies have deviated from well-established economic principles 

by asserting that consumers and businesses benefit from government mandates that restrict choice. The evidence for this view, I 

believe, is weak, and assuming that citizens are not capable of 

making sensible decisions that affect their own pocketbooks is not 

the right way to advance the important goal of enhancing the quality of our environment. 

Thank you very much. 

[The prepared statement of Mr. Gayer follows:] 

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Mr. WHITFIELD. Thank you, Mr. Gayer, and thank all of your for 

your testimony, and once again for being here with us today. 

Ms. Burt, I want to ask you a question to start off with. I notice 

in your testimony you were talking about the per capita use of energy in California has been flat since 1970, so we are talking about 

30 or 40 years. You are talking about the new technologies that 

have been launched. You talked about the new policies of the government and working with the utilities. You talked about $20 billion in savings. You talked about the lack of necessity to build 25 

new generating plants. With all of those efficiencies and everything 

else, why is it that the California electricity rates are among the 

highest in the country, with the exclusion of Alaska or Hawaii? You 

all have been so productive in so many ways. Why is it that electricity rates are so high out there? 

Ms. BURT. Well thank you, Mr. Chairman, for the question and 

for the opportunity. 

California electric rates are high, and matter of fact, they are 

within the top 25 across the country of major utilities. The bills of 

Californians, however, are among the lowest, and so I think you 

have to look at both of those in collaboration. 

Mr. WHITFIELD. How is that possible? How does that work? 

Ms. BURT. Well, energy rates in California are higher the more 

you use. It is an inclining tier structure and it is designed that way 

to encourage energy efficiency. The lower rates, though, however, 

are very comparable to other parts of the United States. And so 

when we talk about rates, that is one slice of it, but we actually 

work with our customers to lower their bills, and that is really 

what they are about. You know, again, we serve about 15 million 

Californians across northern and central California, and we have 

a wide variety of customer groups. 

Mr. WHITFIELD. What would you say the average per kilowatt 

hour is for industrial use in California? 

Ms. BURT. You know, Mr. Chairman, I don’t have that with me 

directly but I can certainly get back to you with that information. 

Mr. WHITFIELD. I am assuming that it—I mean, I am not complaining about it or anything, but I am assuming it must be much 

higher, because if you have residential use really cutting down on 

their consumption, and then that is low as the average utility bill 

in America, that must mean the industrial use must be a lot more 

expensive. 

Ms. BURT. Thank you, Mr. Chairman, let me clarify a little bit 

more. We actually have energy efficiency programs that span 

across all of our customers. So within our energy users that are 

high industrial customers are refineries, and we have many in 

California. We have oil producers in California, we have food processors within our service territory. We have programs that work directly with each of those types of businesses to lower their energy 

costs—— 

Mr. WHITFIELD. But even though the individual bills may be low, 

why is it that the production is so high, the cost? 

Ms. BURT. Well again, the energy policies across California are 

designed to encourage conservation, encourage energy efficiency. 

On the industrial side, however, again, what the industrial customer—and frankly, what our commercial customers and residenVerDate Nov 24 2008 15:09 Jul 29, 2013 Jkt 037690 PO 00000 Frm 00202 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-8 CHRIS
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tial customers care about are the size of their monthly bills. And 

the size of their monthly bills are among the lowest in the Nation. 

Mr. WHITFIELD. The size of your—— 

Ms. BURT. Of their monthly bills, so their usage is—— 

Mr. WHITFIELD. And we are talking about who and here now, 

residential users? 

Ms. BURT. Mr. Chairman, actually all of our customers. The size 

of their monthly bills are among the lowest—— 

Mr. WHITFIELD. Are among the lowest in the country? 

Ms. BURT. Yes, among the lowest in the country. They certainly 

aren’t the lowest, but they are among the lowest. 

Mr. WHITFIELD. Mr. Crouse, let me ask you a question. The Section 433 prohibits the use of fossil fuels in new or modified federal 

buildings by the year 2030 or so. Now you were testifying on behalf 

of the Combined Heat and Power Association. Wouldn’t a prohibition such as that make it more difficult on the adoption of high efficiency technologies, such as combined heat and power for federal 

buildings? 

Mr. CROUSE. Well, I think it certainly could. One of the opportunities, though, is to look at biogas or other means of destructing organic waste to use, then, the fuel or the natural gas, the methane 

that comes off of the anaerobic digesters, or in some cases, gas that 

would come from other processes on those bases. The other, you 

know, option would be for us to look at using natural gas as a fuel, 

as a transition fuel, and look down the road at possibly using those 

new fuels that come online and the new products that would become available in that timeframe, to use them, including some of 

the new biofuels that are looking at being generated from algae 

and from other sources. 

Mr. WHITFIELD. OK. Mr. Kosisko, my time is running out, but I 

did pay attention to what you did with Archema down in my district. That $300,000 annual savings was quite impressive, and I 

want to thank you for mentioning that. 

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

for 5 minutes. 

Mr. RUSH. Ms. Burt, you talked in your testimony about PG&E’s 

comprehensive approach to energy efficiency. You included different strata of individuals and demographic groups in your statement. The question that I have is do some of these outreach programs that you discussed, have you engaged young people, young 

students in some of this outreach and could you speak to the educational activities and initiatives that you have with the youngest 

of our citizens? 

Ms. BURT. Thank you, Mr. Rush. Yes, absolutely, Congressman 

Rush, we—our programs do contain a very large component of education, both—primarily in the post-high school area. In fact, we 

have three education centers across our service territory, one in 

Stockton, one in San Francisco, and one in the East Bay area that 

are really focused on training and developing even job skills within 

energy efficiency. We have got the oldest existing training facility 

in Stockton that has been in place since 1978, and I believe we 

have trained something in the neighborhood of over 91,000 people 

to really go out and be productive in the jobs arena around really 

being energy auditors, installing weatherization, all of the different 

198 

phases of energy efficiency within those three centers. So we have 

a pretty broad record on that. 

Mr. RUSH. So you create some jobs with these programs? I am 

trying to focus on young, even younger than high school. It seems 

the earlier we include energy efficiency and an understanding of 

the energy demand, energy sector, the energy issues, including 

costs, but also efficiencies, the earlier we include that in the education of our younger children, the more we change the culture. I 

think we will have some tremendous benefits. Do you engage, say, 

even at the grade school level? 

Ms. BURT. Yes, Congressman Rush, we do. We have several programs. One of them is our Solar Schools Program where we really 

engage elementary age students around energy in totality. So renewable resources, the value of solar—we actually install solar 

panels on schools and use them in demonstration—classroom demonstration pieces. We have a number of other classroom demonstrations, both around energy efficiency and energy in general within 

the school systems that are used throughout our service territory. 

Mr. RUSH. In your opinion, how is the Federal Government 

faring in these areas? Are there some things that we are doing— 

are we doing enough as a Federal Government to raise the level 

of consciousness of our grade school-level students, high schoollevel students? Are we doing enough as a Federal Government? 

Ms. BURT. Thank you. That is a wonderful point. I think all of 

us can do more to engage the next generation around energy, and 

not just energy production, but using energy efficiency as a source 

of production. And I think learning what new technology—and 

again, the combining of really this new—the new IT and smart grid 

with what energy efficiency can do is going to be an amazing future 

for that generation. I think the Federal Government can do more. 

I think we can all do more to encourage education. 

Mr. RUSH. Thank you, Mr. Chairman. I yield back. 

Mr. WHITFIELD. Gentleman yields back. 

At this time, I recognize the gentleman from Texas, Dr. Burgess, 

for 5 minutes. 

Mr. BURGESS. Thank you, Mr. Chairman. I appreciate the recognition. 

Ms. MacIntosh, let me ask you. You heard the testimony of Dr. 

Hogan and the first panel. Do you work with the—with their office, 

the Department of Energy Efficiency and Renewable Energy? 

Ms. MACINTOSH. We do. All of the member companies of the Federal Performance Contracting Coalition work hand-in-hand with 

the Department of Energy. They oversee the indefinite delivery and 

definite quantity contracts that we all operate under to implement 

energy savings performance contracting for the Federal Government. 

Mr. BURGESS. Now you referenced that there, in fact, was a congressional mandate that required some of this performance standards. Do you recall when that congressional mandate was passed? 

In your written testimony, you referenced 1986 and said implementation was occurring in the ’90s. So—and this is a well-established 

pattern, is that correct? 

Ms. MACINTOSH. Correct. 

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Mr. BURGESS. This is not something that is new that should 

be—— 

Ms. MACINTOSH. Performance contracting? Oh, no. 

Dr. BURGESS [continuing]. A surprise to—— 

Ms. MACINTOSH. It should not be a surprise to anyone. 

Dr. BURGESS [continuing]. Dr. Hogan? Well—— 

Mr. WHITFIELD. Ms. MacIntosh, would you mind using Mr. 

Crouse’s microphone, because we—and—— 

Ms. MACINTOSH. Is this a little better? 

Mr. WHITFIELD. Yes, that is better. 

Mr. BURGESS. Whoa, super. And you know, I was making the 

point—and not just an academic one—in Congress, we get criticized 

for passing mandates and then not living under them ourselves. I 

referenced how in my own personal life I have made energy efficiency decisions that were based upon what I would consider would 

be the correct market signals. And yet, we have a great big glorious 

federal building here, the Rayburn Building. I am fortunate enough 

to have an office here. Yes, indeed, they did change all the lighting 

around back in 2007 or 2008, but when I look at the biggest source 

of energy loss, it has got to those single pane windows that are in 

existence in the Rayburn Building, in the Cannon Building, in the 

Longworth Building. I don’t get to go over on the Senate side, but 

I suspect you have got the same thing over there. So did you do 

an audit for the Department of Energy on, say, the Rayburn Building, like we have mandated that other industries do on their structures? 

Ms. MACINTOSH. Yes, that is correct, and that was done in the 

2008–2009 timeframe. A comprehensive audit was performed for 

all of the House office buildings. The same was also done for the 

Senate office buildings. 

Mr. BURGESS. Yes, we will ignore the Senate for right now, since 

they are ignoring us. Would it be fair to say that—I mean, lighting, 

yes, it is a significant expense. To me, it would have made more 

sense—I mean, had I been doing this in my private life and I wanted to change all my lighting, I would have waited until a bulb 

burned out and then replaced it with an LED or a CFL, if that was 

my inclination. To go in and change all the lights around—basically 

during a congressional recess, I mean, that was a pretty expensive 

undertaking. I have got no idea what happened to the old light 

bulbs. I hope they gave them to another country so that they could 

use them. But it almost seems like that was the obvious—the lowhanging fruit in this endeavor, but if you really want to look at 

where the energy efficiency exists in an older building like Rayburn 

or Cannon or Longworth, it is going to be in the window treatments, not in the lighting structures. 

Ms. MACINTOSH. Mr. Terry, the beauty of the energy saving performance contracts—excuse me, Mr. Burgess—it was the direct line 

of sight. The beauty of the energy savings performance contracting 

program is that you are supposed to look at things from a holistic 

standpoint. So energy savings were generated from lighting, certainly, but that was really only one of the many measures that 

were implemented. The real meat of an ESPC, typically, is in the 

places you don’t see. It is in the chiller plant, it is in the boiler 

plant, it is in the direct digital control systems of a facility that 

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measure and monitor and modulate temperature, for example. All 

of those systems, including water systems as well, were addressed 

in all of these buildings. You know, that audit that was performed 

at the time is also intended to be a very comprehensive menu of 

opportunities that we could implement to generate savings. 

Mr. BURGESS. Yes, we are going to run out of time. You notice 

the chairman has a very quick gavel—— 

Ms. MACINTOSH. Certainly. 

Dr. BURGESS [continuing]. When it comes to me, but could you 

perhaps supply my office with that audit and perhaps provide us 

a little direction as to what has been implemented and what has 

been—what is waiting? Because again, I would like to give people 

some reassurance that we are living under the same rules that we 

are making for other people—— 

Ms. MACINTOSH. Agreed. 

Dr. BURGESS [continuing]. And that the smart thing to do is to 

respond to appropriate market signals and not the congressional 

mandates. 

Thank you, Mr. Chairman, for your indulgence. I am going to 

yield back the final 2 seconds. 

Mr. WHITFIELD. You are welcome, Dr. Burgess. I gave you an 

extra 50 seconds the last time, so—at this time, I recognize the 

gentleman from California, Mr. McNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman. I want to welcome 

you to Washington, Ms. Burt, for your testimony here this morning. 

I had the privilege of visiting a PG&E training facility in Stockton, 

and with Chris Foster—it was about a year ago, and it is certainly 

state-of-the-art. It is very impressive. Do you think that that facility and facilities like that are producing enough trained workers, 

or is there an additional need for additional facilities to meet the 

market demand right now? 

Ms. BURT. Thank you. Thank you very much, and it is a delight 

to be here, Congressman. We are certainly happy to be here from 

California. 

That facility in particularly and the other two, the sister facilities 

that we have, the facility in San Ramon, which really trains and 

really does a lot of research and work around the food industry and 

emerging technology, and then the one in San Francisco, which is 

really focused on architects and building and really design. I will 

tell you, they are kept consistently busy. And as you mentioned, 

the one in Stockton has actually been in existence since 1978, and 

we have produced 91,000 trained workers. Our own workforce, we 

have about 700 people directly working for—on my team that do 

energy efficiency, and then we hire in our communities another 

2,000 practitioners within weatherization, and these are contractors and we train them. We also trained a number of contractors 

in the most recent funding, the ARA funding that was available. 

So I must say that we don’t find lack of need for training. There 

always seems to be—I looked at the Pacific Energy Center just the 

other day, and I think there were 950 separate classes that were 

being offered. And I know last year in that facility alone, we 

trained—and that, I think, is the smallest of our facilities—we 

trained about 8,000 workers. 

201 

So it is certainly an area as energy efficiency becomes more a 

part of the solution nationally that we should look at, you know, 

and I think if we can get to the point where energy efficiency is 

considered in other places as it is in California as a part of the generation mix, just as a generation plant would be, then I think we 

may need to look at more training facilities. 

Mr. MCNERNEY. Thank you. How do you see the EV market affecting PG&E’s business plan over the next decade? 

Ms. BURT. Well, thank you again. We are very excited about the 

electric vehicle market. It does have challenges with it because 

again, the distribution grid traditionally built across our service 

territory as well as others is in need of upgrading. We are in the 

midst of making our grid much smarter to really integrate electric 

vehicles and other renewable resources, but we are very excited 

about electric vehicles and what they offer, particularly for the environmental benefits and for our customers’ benefits. We know that 

in our service territory—I will tell you, my customers and your constituents are very excited about using electric vehicles. So I think 

you can expect to see us do more on that. 

Mr. MCNERNEY. Thank you. 

Mr. Gayer, would you say that big improvements in energy efficiency would have a stimulative impact on the national economy? 

Mr. GAYER. I think that market-driven improvements in energy 

efficiency are good for the well-being of the economy for sure. When 

you get to certain programs to stimulate, I think it is a little bit 

dicier as far as whether or not it is worth the cost. You would have 

to really see what is the labor being employed and what would they 

have been doing otherwise. In a time of great unemployment, I 

think there is much more evidence that there is such a case, but 

if you are talking about the long sweep of history, I think the evidence is weaker. But certainly, energy innovation and energy efficiency innovation is good for the economy. 

Mr. MCNERNEY. Thank you. 

Mr. Elliott, is there anything that you would—that would give us 

a better return on investment than energy efficiency in terms of energy investments? 

Mr. ELLIOTT. Congressman, at this point I think energy efficiency 

represents one of the best investments that is available in the marketplace. We are in an environment right now, in spite of the current low natural gas prices, where many of the other energy 

sources are increasing in cost, as has already been noted in the 

case of gasoline pricing right now, and investment in energy efficiency represents an opportunity to improve the U.S. GDP by reducing outflow of funds to foreign countries. There is also the issue 

that investment in energy efficiency makes other technologies 

equally accessible. For example, investments in energy efficiency 

can enhance the cost effectiveness of renewable energy by reducing 

the amount of energy that is required. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Thank you. 

At this time, I recognize the gentleman from Ohio, Mr. Latta, for 

5 minutes. 

Mr. LATTA. Thank you, Mr. Chairman, and thank you very much 

to our panel for being with us today. 

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If I could, Mr. Gayer, if I could start with you. I apologize for my 

voice. It is allergy season. But I found your testimony interesting, 

because you kind of hit home to my district. I represent 60,000 

manufacturing jobs in northwest, west central Ohio that we—some 

of our companies are very large, some are very small. We have a 

great need for base load capacity out there, and I go through factories, I mean, literally all the time. And probably in the last, I am 

going to say 5 months, I have been through about 150 facilities in 

my district. And I find it interesting in your testimony what you 

are talking about, because I hear this from my folks back home all 

the time, you know. They see these mandates coming down from 

Washington, and again, they are in a global—most of these people 

are on a global marketplace and they are out there very concerned 

about making sure that they can produce a product that is competitive, that—not only in this country, but around the world. 

But in your testimony, I found it interesting. You were talking 

about that—you said there were a number of reasons why the market warranted an approach of setting a price of pollution as cost 

effective, and then regulations such as energy efficiency mandates, 

and you say that the one-size-fits-all energy efficiency mandates ignore the substantial diversity of preferences, financial resources, 

and personal situations. And I tell you, that hits home to my district. If I can just ask you, then, you know, when you talk about 

that, you said that—you testified that the energy efficiency standards could actually reverse some of the energy savings resulting in 

negligible environmental benefits. Could you expand on that? 

Mr. GAYER. Yes, sure. First, I think it is important in all these 

questions to distinguish between—a lot of people are talking about 

innovation and energy efficiency, and I think that is a good thing, 

and when it is driven by the market, it is accounting for their preferences and the diversity of taste and financial circumstances. The 

problem comes when you have an agency that essentially uses certain—imposes mandates and essentially is asserting that certain 

preferences are in some sense invalid. 

Mr. LATTA. Could you give me a couple of examples of—— 

Mr. GAYER. Well, I mean, it is a very simple thing. The way you 

do it is these net present value calculations. You look at—the agency will say well, we think for this appliance fuel costs are going to 

be this in the future. We think the appliance will last this long. We 

think you are going to use it this many times, and we kind of figure out is the higher cost today worth it for you to get the savings 

later, but it is not accounting for other characteristics of convenience and feature and your particular circumstance. And this happens, I think, most egregiously when it comes to commercial products. I mean, you have companies that—as I think you are alluding 

to, that are very narrow profit margins, they are in very competitive industries. Fuel costs might be a huge part of their operating 

costs, and essentially they are being told you are not doing a good 

job, considering the tradeoffs here, and I think my response to the 

presumption is they probably are doing a pretty good job of considering the tradeoffs, because they have circumstances that can’t be 

measured from the regulator’s perspective. And so the presumption 

should be that they actually know what they are talking about. 

Again, there are plenty of incentives for energy efficiency for that 

203 

firm, and I think that is good, but we don’t want—I don’t think we 

should just mandate that—ignore their other preferences, and I 

think that is what the market is good at accommodating. 

My bigger point is a lot of the tech supporting these rules are 

written from the angle that they are helping the environment, but 

what I have just described is really consumer protection. It is not 

environmental protection, it is saying that you are making a mistake by buying an uneconomic product. We, the regulator, are 

going to correct that. I don’t think there is evidence that there is 

a need for consumer protection, but my point is that is a very different thing than designing a regulation to say hey, we have got 

to worry about pollution. You have your circumstances, but you are 

not considering that you are emitting pollution. Let us address the 

pollution, and you wind up with very different regulations. 

Mr. LATTA. Let me follow up for just a second where you were 

talking about consumers. You know, what is best for the consumers 

out there, then, the energy efficiency improvements for market 

forces, or energy efficiency from the regulators? 

Mr. GAYER. Oh, well certainly the former, because the former actually considers they get to consider the other tradeoffs and the 

other characteristics that either drive their consumer preferences, 

or in the case of businesses, buying these products, their bottom 

line. Essentially that is the premise, is I get—I am better at spending money that affects my bottom line than somebody else is, and 

the presumption should be that. Again, if you are trying to adjust 

environmental externalities, which I alluded to, I won’t consider 

that in my consumption decision, and that is, I think, a strong role 

for the regulator there. But there needs to be a distinction between 

are we trying to protect the environment or are we really just consumer protection? 

Mr. LATTA. All right. I think that, you know, again when I am 

going through my facilities back home that the folks back there, 

you know, they are worried about that bottom like, and you know, 

they all want to make sure that there is clean air and clean water. 

And at the same time, they want to make sure they are providing 

the jobs out there for the people in the communities, because that 

is absolutely central. 

Mr. Chairman, with that, I thank you for your indulgence and 

I yield back. 

Mr. WHITFIELD. Thank you. 

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

Waxman, for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

Energy efficiency standards set a minimum floor for the efficiency of appliances and other products. Over the last 25 years, 

these standards have played a key role in improving the efficiency 

of the appliances we all have in our homes. They save consumers 

billions of dollars every year by lowering utility bills, but some 

economists argue that energy efficiency standards are a bad idea. 

They say that the costs of the standards outweigh the benefits, and 

that they reduce consumer choices. They also argue that any cost 

effective efficiency measures would be taken anyway, even without 

the standards, and Mr. Gayer made these arguments today. 

204 

Dr. Elliott, what do you think? Do the costs of these standards 

outweigh the benefits, or do consumers come out ahead? 

Mr. ELLIOTT. Congressman, I want to say that I am—in our view 

and based on our research, consumers do come out ahead, and I 

think we can get some very good examples on this. Perhaps one of 

the longest regulated products in the marketplace is the refrigerator today. My wife and I had the opportunity to replace one recently, and the number of choices that we had in buying this one 

compared to the one we bought 25 years ago, the amenity values, 

the cost, the—were all substantial. 

Mr. WAXMAN. Let me ask you this. Do the standards reduce or 

increase consumer choice? 

Mr. ELLIOTT. I think our experience, at least looking at things 

like lighting products, looking at things like automobiles, looking at 

things like refrigerators, washing machines, they have increased 

our consumer choice. We have more options, we have more amenities. Part of this is a simple fact that we have stimulated the manufacturers to redesign products which they have no motivation otherwise to redesign. 

Mr. WAXMAN. You, in your testimony, talked about huge savings 

for major efficiency improvements. Would we have seen benefits in 

the absence of efficiency standards, or are there market barriers 

that would have prevented cost effective efficiency improvements 

from being made? You talked about an incentive for manufacturers. 

Are there barriers to them or they just don’t think about it because 

they don’t have to? 

Mr. ELLIOTT. I mean, I think it is a complex issue, and as with 

most things, you know, these are not simple decisions. A lot of this 

comes down to information and we talk about in an economic environment where we have perfect information. Consumers don’t have 

perfect information. They have lack of information. They are not 

given or don’t have access or the time—we call that transaction 

cost—to be able to make the choices that may—— 

Mr. WAXMAN. Well how about the choices that manufacturers 

make? Are there barriers to them making efficiency choices? 

Mr. ELLIOTT. Absolutely. Part of it is there is no change in the 

marketplace. In the case of a manufacturer, if we have a static situation in the marketplace and there is no dynamic there, they are 

not going to necessarily innovate. And so the opportunity, I think, 

is standards allow them to innovate and we have seen over the last 

25 years in the manufacturer’s products that are regulated by 

standards coming to understand, and in many cases, they have 

been beneficial to the marketplace. 

Mr. WAXMAN. All right, thank you. 

Ms. Burt, PG&E has a lot of on-the-ground experience implementing programs to incentivize energy efficiency. Do consumers 

take every cost effective energy efficiency measure on their own, or 

are supporting policies necessary? 

Ms. BURT. Thank you, Congressman. We would agree that supporting policies are necessary and, in fact, we do make many, 

many, many of our programs available directly to the consumer. 

We also give them a lot of information. But that simply alone 

doesn’t do the trick. We also have incentives to manufacturers, so 

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erator, you know, our goal in California, as you probably know, is 

to work collaboratively with manufacturers across the country—— 

Mr. WAXMAN. And you have done that very well. I am sort of 

moving forward because I only have a limited time, but I wanted 

to ask you, first of all, you testified PG&E efficiency programs result in energy savings that saved your customers $20 billion and 

avoided the need to build 25 large power plants. These efficiency 

initiatives are cheaper than building new power plants, aren’t 

they? 

Ms. BURT. Yes, sir, they are, and—— 

Mr. WAXMAN. And what is PG&E’s experience with appliance efficiency standards and State building codes? Are these onerous government mandates or are they cost effective ways to drive energy 

efficiency improvements? 

Ms. BURT. Well, thank you. Our view of codes and standards is 

they are part of the portfolio of energy efficiency. We work on codes 

and standards. We work upstream with manufacturers. We work 

with cities. We work with governments to create incentives before 

the standards are set. So it is not as though the standard is set 

first, you know. Our view of the world is let us incent the more energy efficient refrigerator, more energy efficient televisions, and 

then let the standard evolve as the market pulls. And that has 

really been very effective in California, as you know. 

Mr. WAXMAN. Well, I commend you for what you have done in 

California. Thank you very much. 

Mr. WHITFIELD. Gentleman’s time is expired. 

I recognize the gentleman from Texas, Mr. Olson, for 5 minutes. 

Mr. OLSON. I thank the chairman and welcome the witnesses. 

You start here in the morning, now it is the afternoon. So thank 

you for your time, your expertise, and most importantly, your persistence. 

Mr. Kosisko, I would like to thank you for helping me to tour 

ABB’s facility in Houston last year. In your testimony, you mentioned barriers to investment in industrial efficiency, lack of a clear 

business case, inadequate funds for financing, and a general lack 

of information. Could you expand on what NEMA and IEEC are 

doing? Is there a particular success story that stands out to you? 

Mr. KOSISKO. Thank you, Congressman, for the question. 

NEMA, IEEC, and ABB are all working within the industry to 

increase awareness, which I think is one of the key impediments 

to adopting energy efficiency technologies into the industrial space. 

Let me give you an example. If you look at a typical industrial 

motor, for instance, that industrial motor, over its life cycle, 2 percent of its total cost to operate is the initial purchase price of that 

motor. Ninety-seven percent of the cost is the energy utilized over 

its lifetime, but yet, there are decisions made on a daily basis by 

various industrial customers on the initial procurement price of 

that motor, and I think it is widely made because of the lack of understanding and general information available. NEMA and IEEC 

within ABB, we do a lot to promote awareness and improve visibility of the types of products and systems and services that will 

help in industrial energy efficiency. 

Another example, we have a show each year, Automation and 

Power World, that we sponsor at ABB where we bring in over 

206 

2,000 industrial users into a conference. We have over 400 seminars. A good portion of those seminars are focused on energy efficiency and the types of products, systems, and services and other 

methods that could be used within the industrial environment to 

reduce energy consumption and make industry more competitive 

here in the United States. 

Mr. OLSON. Now I am questioning—being from Texas, one thing 

I worry about is our grid reliability. Our State, our margin for excess capacity is very slim now, and that is largely because of overregulation by the Obama Administration, our vast growing population, and conflicting federal agency laws that force a power provider to choose between one agency and another in direct conflict. 

I used the last Congress to this Congress to adjust that factor, but 

I am intrigued by the Volt/VAr grid optimization technology you 

have. Can you tell me how that would work to improve the efficiency of the electric grid and improve grid reliability? 

Mr. KOSISKO. We have several technologies that help actually improve the efficiency of transmission and distribution of power and 

grid reliability. One of the most predominant is our high voltage 

direct current technology and the transmission of energy. This allows for much lower losses in the transmission of high voltage 

across longer distances, and helps us to better connect the grid, 

whether it is with traditional power sources or whether it is with 

alternative power sources and renewable power sources. So that is 

just one example. It typically reduces losses by about 10 percent, 

which certainly is a terrific improvement when you look at the 

amount of energy that gets transmitted across those lines. 

We also provide software that helps manufacturers and grid and 

utilities to better manage the grid, improve its reliability, improve 

demand response so at peak seasons or at peak times during the 

day, we could better produce energy in a more effective way with 

lower cost fuels and better fuels. Just a few examples. So we have 

several technologies in that space. 

Mr. OLSON. Thank you. 

My final question is to you, Mr. Crouse. In your oral testimony, 

you mentioned the Federal Government picking winners and losers 

in the energy sector, largely through the RFS, renewable fuel 

standards, as a challenge to combined heat and power. I am also 

aware of a company back home called TAS, which faces similar 

challenges. They are trying to do a waste heat to power model of 

operations. Can you briefly describe the differences between combined heat to power, waste heat to power, and microturbines? 

Mr. CROUSE. Certainly, I will try. Thank you for the question, 

Congressman. 

You know, waste heat to power is typically taking an existing 

thermal energy store—source and using it in a device to generate 

additional electricity or make useful, you know, products or energy 

out of it. Microturbines and other CHP generation technologies are 

very similar in how our products are applied. We install the generator, and then the thermal energy is used typically with inside the 

facility of the host client to increase the overall efficiency of the 

plant. So we are able to use the electrical energy and the thermal 

energy to make hot water steam, chilled water. You know, one of 

the challenges we faced is the evaluation is far more complex for 

207 

CHP than it is for changing light bulbs or putting in high efficiency 

motors or VFDs, so the challenge is customers tend to shy away 

from more complex transactions and/or payback scenarios than the 

simpler ones. That is one of the uphill battles that we have. 

Mr. OLSON. Thanks. I am out of time. I yield back. 

Mr. WHITFIELD. Gentleman’s time is expired. 

At this time, I recognize the gentleman from New York, Mr. 

Tonko, for 5 minutes. 

Mr. TONKO. Thank you, Mr. Chair. 

First, an observation. I have heard so many comments here 

today about—from the panel about what the market rule, what the 

private sector—the agents have changed and that things will happen, and I find it interesting. There was a great call for policies, 

for standards, for regulation, for incentives, for codes, for implementation of those items above, and calling for investments and 

R&D appeal. So I think it is a very telling statement here today. 

I would first go to Ms. MacIntosh, please. You state in your testimony that the barriers to increase usage of an ESPC are difficult 

to quantify. I would ask, what role do energy prices play in a decision to use an energy savings performance contract? 

Ms. MACINTOSH. That is a very good question. Energy prices obviously dictate the breadth with which we can apply an energy savings performance contract to a facility, because all of the project 

implementation costs and care and feeding of an ESPC are covered 

by the energy savings and the energy cost savings that are generated by those improvements. The areas where you have high energy rates are obviously going to have an easier time of doing a 

performance contract than areas where energy rates are more competitive. 

Mr. TONKO. And then how are the changes in energy prices in 

the term of a contract addressed? How do those changes get incorporated into the contract? 

Ms. MACINTOSH. What we do in the course of developing an energy savings performance contract is a lot of historical analysis of 

how energy rates have changed for that particular customer over 

time, and then we utilize a lot of sources through Department of 

Energy, through NIS, and other areas on what forward projections 

are supposed to be, and then we look to put together a conservative 

value on what we believe the energy prices are going to be, a floor, 

if you will, to utilize throughout the term of the contract. 

Mr. TONKO. Back in my New York State days working with energy policy and implementation, we held a hearing with data centers. Do you see the application with data centers being a real 

thing? 

Ms. MACINTOSH. We are just starting to see that as a real possibility in energy savings performance contracting because of their 

high energy draw, and there is an awful lot of technology advancement that is happening in the IT and data center arena. So it certainly is an opportunity for us to incorporate ESPC in that market. 

Mr. TONKO. Thank you. 

Mr. Crouse, the barriers to expanded deployment of CHP may be 

many, but finding the upfront capital, I have to believe, is a big 

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ance contracts been used much by the private sector to install 

CHP? 

Mr. CROUSE. Certainly. We have customers that use the energy 

savings model in the private sector as well as in the government 

sector to deploy our technology and other CHP technologies. 

Mr. TONKO. And where in our industrial applications do you see 

some of the best opportunities? 

Mr. CROUSE. You know, I think you need a customer that is 

using thermal energy—hot water, steam are the easiest sort of customers. Food processing, cheese, you know, customers in the plastics business are natural targets for us. So those are on the industrial side some of the low-hanging fruit, if you will. 

Mr. TONKO. And Mr. Elliott, I assume some of the resistance to 

new product efficiency standards is the cost to manufacturers of altering their product design and manufacturing process. What is the 

experience that you have with the product vendors, in terms of perhaps incorporating the message for efficiency of—efficiency standards? 

Mr. ELLIOTT. There absolutely is a significant transaction cost for 

a manufacturer when they do reengineer their products or reengineer their products to incorporate energy efficiency. That said, that 

also gives them the opportunity to revise their manufacturing processes. For example, in the electric motor industry when we saw 

motor standards come in, we saw a consolidation of motor designs 

by the manufacturers and implementation of flexible manufacturing. So this actually allowed them to produce a higher quality 

product that was accepted by the marketplace as a—on the basis 

of its performance. So yes, there was cost occurred—incurred by 

the manufacturers, but what it did was really allow them, in the 

case of the motors, not only produce a product that met the customers’ needs better, but also allowed them to compete globally 

against many of the low-cost producers who were not being able to 

produce a product of similar performance. 

Mr. TONKO. Thank you. 

Ms. Burt, just a comment to your earlier statement. Consumers 

don’t pay rates, they pay bills, so I appreciated the statement that 

was being given. 

With that, Mr. Chair, I will yield back. 

Mr. WHITFIELD. Gentleman’s time is expired. 

At this time, I recognize the gentleman from Virginia, Mr. Griffith, for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I will follow up on 

some comments that were made earlier, and maybe in the previous 

panel for some of it. I would like to say—I am going to ask you a 

question in a minute about that Christiansburg facility, but I do 

look forward to going up there and seeing it in action at some point 

in time, but I am going to get you to do a little science on it for 

me, Mr. Crouse. 

Before that, I would like to say to you, Mr. Kosisko, thank you 

so much for having a facility in the Ninth District of Virginia. It 

is doing great work there, and our biggest problem is is that because it abuts a mountain, we have got to find space to expand, 

and I hope that it will still be in the Ninth District of Virginia, but 

we don’t have that many flat places. But anything I can do to help 

209 

you all find facilities for the current facility or anything else you 

would like to move to my district, I am more than happy to do, and 

I appreciate all the work that you are doing. 

Ms. MacIntosh, I would like to get a copy of the inventory or survey of the buildings on at least the House side as well. I love the 

windows, but I agree with Dr. Burgess, there has got to be something we can do a little more efficient than the current windows 

that we have. I will confess that I like to open those windows from 

time to time, particularly when the weather is nice, and I would 

hate to lose that, but also, I understand that we have got to have 

some energy efficiency. 

That being said, going back to a previous panel, I would comment that I do worry a bit about not having buildings that breathe 

a little bit, because then the indoor air pollution does go up, as Mr. 

McKinley pointed out, and so that is something we do have to put 

in the overall equation. 

Mr. Crouse, coming back to you, I would ask so that you can explain it to me, because I am not an engineer. I was a lawyer before 

I came to Congress. You have got a 65 kilowatt microturbine installation in the town Christiansburg waste water treatment plant, 

and you indicated in answers to questioned earlier that a lot of 

those facilities where these are located, they use it onsite. I am trying to figure out—and they may not, but does Christiansburg use 

that energy onsite, or does it—do they wheel it off somewhere else? 

Mr. CROUSE. Thank you for the question, Congressman. They 

certainly use it onsite. Waste water treatment plants are unique in 

that they do a lot of water pumping. They also use the thermal energy to heat the digesters, so especially in the winter months, you 

know, to keep the chemical composition, the temperature correct in 

the digester, they use the thermal energy from their CHP system, 

and then the electricity is just—reduces the amount of purchase 

power that they have from the utility, because typically they do not 

generate enough digester gas to supply all of their electrical requirements at a waste water treatment plant. 

Mr. GRIFFITH. All right. Thank you very much. 

I should mention that ABB does a lot. When I toured their facility there in Bland, I did note that they pointed out a lot of things 

that they were doing to keep their energy costs under control and 

to be very efficient at that facility. I would also have to note that 

I went back for, I don’t know, a second or third tour to the large 

Volvo facility in my district, and they are doing all kinds of things. 

They have got a couple of windmills, they have got solar panels. 

They have installed passive solar in a number of places where 

there—because they are skilled at doing a lot of these things, they 

have actually done a lot of it themselves. But the one that I found 

the most interesting that I think folks maybe want to pay attention 

to is that somebody on their team—they have suggestion boxes and 

give out rewards. Somebody on their team figured out that because 

they have 2,000-plus people who are captive in the factory, they all 

know where the drink machines are and where the snack machines 

are, and so they took the light bulbs out of them and they were 

really surprised at how much electricity they saved. So when we 

are talking about efficiencies, sometimes simple things work very 

well in that regard. 

210 

Mr. Gayer, I have only got a minute left, but I was wondering 

if you could comment on refrigerators since that came up earlier, 

because one of the things I have noticed is, well, I think we all 

ought to have the most efficient equipment that we can have. If 

you have got a refrigerator that is struggling on, you might stay 

there if the cost is high to do something else, and a lot of the innovations I have seen have been technologically driven as opposed to 

energy efficiency, because I can’t imagine that water and ice in the 

door as opposed to having to reach inside is a whole lot more efficient. Maybe it is. Can you expand on that and help me out? 

Mr. GAYER. Yes, a few things. One is I agree with Mr. Elliott, 

the choice has expanded over the last few decades in all appliances, 

but I think that is market driven and certainly not due to mandates, which by their nature, restrict choice. And you are exactly 

right, one of the reasons these don’t work that effectively or cost 

effectively to reduce energy is because people sometimes hang on 

to their older products longer, especially if it is a big ticket item, 

and it is going to cost more money due to a different—a new regulation. 

Mr. GRIFFITH. And do you have any data that would indicate how 

much the price of a—percentage-wise or otherwise that—how much 

the price of a refrigerator has been impacted by—— 

Mr. GAYER. I don’t have it with me. There is a—primarily in the 

vehicles, when one deals with vehicles too. There is always an impact whenever you raise CAFE AE1 standards, you have to worry 

about you get a slower turnover of the fleet and new vehicles tend 

to be more fuel efficient. I don’t have the numbers offhand, though. 

Mr. GRIFFITH. All right, thank you, sir. 

Mr. WHITFIELD. Gentleman’s time is expired. 

At this time, I recognize the gentlelady from California, Ms. 

Capps, for 5 minutes. 

Mrs. CAPPS. I want to thank the chairman for calling today’s 

hearing. Thank you to all of our witnesses for a long day of testimony. 

I think it is a great topic. Increasing energy efficiency is critical 

to our Nation’s energy future, and as is clear from today’s testimony, the private sector is doing a great job of innovating and 

bringing new energy efficient technologies to customers. But the 

federal policy, I believe, also plays a critical role in this process. 

Neither the Federal Government nor the private sector on its own 

does as good a job as we want to have done when they all work 

together. But working together, these public-private partnerships 

can lead to great advancements that create jobs and can save consumers money, but also spur innovation and benefit the environment. I see it every day back home in my district on the Central 

Coast of California. I represent two world-class research universities: Cal-Poly San Luis Obispo and the University of California 

at Santa Barbara. Research conducted at these public universities 

is frequently spun off into very successful local companies which I 

have visited, like Soraa and Transphorm, and many others. These 

companies continue to innovate and develop new technologies, and 

they are creating jobs at the same time, spurring economic growth. 

So my first question is to you, Mr. Crouse. Your company is similarly innovating and staying at the forefront of your industry. In 

211 

your testimony, you mentioned federal R&D funding as an important contributor to your company’s growth. Could you elaborate on 

that just for a minute, because I want to ask other questions, too, 

but how has Capstone benefitted from federal R&D funding? 

Mr. CROUSE. Thank you. I will be as quick as I can. 

The—we have several programs currently that we are working 

towards efficiency and reliability, so through the DOE, we have a 

250 and a 370 kilo microturbine that we are developing that will 

improve the electrical efficiency of our product and broaden the 

number of applications it can go into to get higher overall efficiencies. And then we are working on other fuel types, syn gas and 

other things. Some of our original technology was developed in cooperation with the public sector as well. 

Mrs. CAPPS. So you are a good example for the rest of us. 

My second question goes to you, Ms. Burt. Of course, these energy efficient technologies not only create jobs and support small 

businesses, but they also benefit consumers. I want to focus on this 

intersection between technology and energy and how it really 

makes a difference in the lives of the people, and that is actually 

the bottom line. Ms. Burt, we all know how these technologies can 

reduce energy use in our homes and businesses, and lower cost for 

consumers, but I am curious about the efficiency improvements 

being made to our energy infrastructure. For example, could you 

discuss what efficiency technologies PG&E is deploying on the infrastructure side and how this is going to benefit consumers in the 

long run? 

Ms. BURT. Thank you. That is a very good point. We are—again, 

this is the intersection between technology and energy, and it is 

very evident in the smart grid that is being deployed. Within California and our distribution network, we are deploying a device 

called a FLISR, and that is not a very catchy name, but it stands 

for fault location isolation, and service restoration, and it literally 

takes any kind of interruption along the circuits that have the device from being a typical 1 to 2 hour outage to being less than 5 

minutes. And as we deploy those, we have deployed—about 135 circuits are completely deployed to date. By the end of this year, we 

will have 400 circuits deployed, and I am really happy to say that 

in 2012, we had the highest reliability we have experienced in the 

history of our company. So we are quite pleased with how intelligence and energy efficiency works within the grid as well. 

Mrs. CAPPS. And when that disruption in service happens, you 

know, there is a ripple effect on how it impacts your customers. 

Finally, Ms. Burt, I want to touch on a key point that you made 

in your testimony about energy efficiency training. PG&E—and I 

am thinking about the facilities I have in my district—your Pacific 

Energy Center has been training students in energy efficiency for 

many years. I am curious about the demand for this kind of training. Have you seen enrollment in your training courses increasing 

in recent years? If so, why do you think that is? In other words, 

is this catching on? 

Ms. BURT. Thank you, Congresswoman. I do believe that we have 

seen enrollment increasing, particular with the ARRA funding and 

the weatherization and the cities and counties and the jobs that 

were created within the State of California. Our role in that—we 

212 

weren’t a part of the funding, but our role in that was to train and 

properly train—— 

Mrs. CAPPS. Right. 

Ms. BURT [continuing]. The workforce. So we have seen a consistent increasing interest in these sorts of jobs, because they are 

very relevant. 

Mrs. CAPPS. And I saw this firsthand during the recession. The 

weatherization of older homes—what is it, any structure that is 

over 10 years old, maybe it is even less than that? 

Ms. BURT. Yes. 

Mr. CAPPS. Can benefit cost-wise, bottom line-wise, and then you 

can train unemployed people, give them a job. It is not very sophisticated in many ways, focusing on just older homes, putting in 

more efficient windows, window sills, the win-win with more people 

working, and the lower energy cost for maybe a couple living on a 

fixed income. It just—it does really—over the long haul really have 

an impact. 

Thank you very much for your time. 

Mr. WHITFIELD. The gentlelady’s time is expired. At this time, I 

recognize the gentleman from Illinois, Mr. Kinzinger, for 5 minutes. 

Mr. KINZINGER. Thank you, Mr. Chairman, and thank you all for 

coming. I really appreciate it. 

As has been discussed today by our first few panels, improving 

energy efficiency in America will play a pivotal role in increasing 

U.S. energy productivity and making America more energy secure. 

The benefits from implementing energy saving techniques and 

technologies are felt by nearly every part of society through higher 

productivity, reduced energy costs, lessened environmental impacts, and a return of billions of dollars to our economy that was 

previously going to waste. As we move forward to promote adoption 

of energy saving technologies and improve awareness of their benefits, promoting the facts outside of the light of partisan politics will 

be crucial. 

Recently it was my honor to be nominated to serve as an honorary vice chair to the Alliance to Save Energy, a bipartisan group 

of members of Congress, corporate CEOs, and organizational leaders focused on promoting the benefits of energy saving technologies 

and encouraging their adoption. I am excited to be working with 

this diverse group, and believe it can serve as a model for problem 

solving across the partisan divides, which we kind of need nowadays. 

At this time, I ask unanimous consent that the Alliance Commission on National Energy Efficiency Policy Energy 2030 Report be 

included for the record. 

Mr. WHITFIELD. Without objection. 

[The information appears at the conclusion of the hearing.] 

Mr. KINZINGER. The benefits of adopting energy efficient technologies are undeniable. Congress must work to educate consumers 

and businesses to these benefits, allowing for the private sector to 

move forward, upgrading our energy infrastructure. 

I want to commend private industry for taking the steps to ensure energy efficiency. I particularly want to thank the pay TV industry, which includes cable operators, Bell companies, satellite 

213 

providers, and consumer electronics manufacturers for their agreement announced last year to make sure that consumers’ set top 

boxes are even more energy efficient. This is a great precedent for 

the private sector, stepping up to the plate and doing the right 

thing without government mandates. 

Mr. Kosisko, in your testimony you mentioned a 2011 study by 

the Economist Business Intelligence Unit in which businesses were 

asked to identify the main barriers to investment and industrial 

energy efficiency. By far, the most popular response was a lack of 

clear cut financial case for the energy efficiency investments. How 

can government work with organizations and companies like yours 

to get out the facts and make the clear cut case for companies to 

make energy efficient upgrades? 

Mr. KOSISKO. Thank you, Congressman. You know, as I mentioned before, I think that education, I think that promotion and 

creating visibility in the marketplace is going to be crucial to us 

moving forward. Certainly, you know, there is a competition for 

capital. When you look at private investment in industrial companies, they are going to make decisions based on how they can most 

effectively use the capital over the next 2 to 3 to 4 years. Some of 

these technologies have longer payback periods, so I think it is important that we provide the level of education so that they can 

make targeted decisions in certain technologies that will have 

shorter payback periods, produce results for them in a shorter 

timeframe, but also, I think that we need to look at what we can 

do in a smart way to promote them in using these technologies that 

may have longer payback periods, but will be crucial for us in 

maintaining our competitiveness from an industrial perspective in 

this global economy. 

Mr. KINZINGER. Well thank you, and I think even having these 

hearings is a good start. 

Ms. Burt, in your written testimony you commend the work and 

recommendations of the Alliance to Save Energy’s Commission on 

National Energy Efficiency Policy, which issued a report, Energy 

2030, highlighting several policies concerning existing technologies 

for policy makers to include to consider. Of those recommendations 

to increase energy productivity is for the government to lead by example. You also mentioned that Pacific Gas and Electric Company 

is currently completing a project for NASA Ames Research Center 

near Mountain View, California. This project encompasses more 

than 100 buildings and covers in excess of 2.5 million square feet, 

and allowed NASA to save 9 gigawatt hours of electricity, 1.3 million therms of natural gas, and more than 15 million gallons of 

water annually. With results this substantial, could programs with 

similar amounts of savings be duplicated at other federal agencies? 

If so, what are the main challenges that we face in doing that? 

Ms. BURT. Yes, thank you, Congressman. They absolutely can be 

duplicated. In fact, we have three currently underway and 11 that 

we are hoping to move forward with within our service territory. 

What are the main area of improvement is really in the contracting. What we have found is that as we work with NASA Ames, 

the VA, the IRS in Fresno, the FAA in another part of our service 

territory, it is a complete recontracting process. So if we could find 

214 

some sort of simple standardization for these sorts of contracts for 

the utility services contracts, I think that would benefit both sides. 

Mr. KINZINGER. That sounds great, perfect time, too. I yield back. 

Mr. WHITFIELD. Thank you, Mr. Kinzinger. 

At this time, I recognize the gentleman from Illinois for an additional question. 

Mr. RUSH. Ms. Burt, I do have one quick question. I am very impressed with what PG&E is doing in California, and are there similar programs that you are aware of in Illinois or Chicago, in terms 

of your training programs? 

Ms. BURT. Thank you, Congressman. I am just not that wellversed in Illinois. I am very, very well-versed in California, but not 

in Illinois. 

Mr. WHITFIELD. Thank you all very much, and before we conclude, I am just asking unanimous consent that the following materials and statements be entered into the record from Arkema Corporation, the American Chemistry Council, the Alliance for Industrial Efficiency, Heat is Power Association, and Pew Charitable 

Trust. 

Without objection, I would enter these into the record. 

[The information appears at the conclusion of the hearing.] 

Mr. WHITFIELD. Thank you all once again for your time and traveling to come to Washington. We appreciate your testimony and we 

look forward to working with all of you, and hope the next time we 

have a hearing on efficiency, which we will soon, that we will have 

just as many people stay throughout the entire hearing. 

So thank you all very much, and with that, the hearing is adjourned and the record will be open for 10 days. 

[Whereupon, at 1:36 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

PREPARED STATEMENT OF HON. JOHN D. DINGELL

Mr. Chairman, energy efficiency is one of the simpler ways for us to achieve energy independence and security. By making the vehicles, appliances, and buildings 

we use every day more efficient, we can get more bang for our energy buck. 

Recently, the cable industry announced new efficiency standards for the cable 

boxes we use to watch and record our favorite shows. These improvements will result in half of the energy currently consumed and estimates are that the new efficiencies will cut consumers’ electricity bills by approximately $1.5 billion. To speed 

up efficiency improvements for existing boxes, the industry will release a software 

update that will immediately result in energy savings of 20 to 30 percent on current 

devices. 

The cable industry is to be commended on this forward thinking to adopt practices 

that can take effect now and drastically improve efficiency moving forward. As our 

country looks to new sources of energy such as fossil, nuclear, and renewable, we 

must also look for the low-hanging fruit that help us address this issue. 

In addition to this innovative thinking by industry, I also believe that industry 

must continue to work with regulators because good energy policy and good economic policy go hand in hand. By collaborating with industry and consumer groups, 

the Federal government can develop standards that can be cost-effective for both industry and consumers while maintaining our energy security. 

There was a time, not too long ago, when we could work on a bipartisan basis 

to develop ways for American companies to compete and innovate. The Energy Independence and Security Act of 2007 was probably the most recent example of that 

bipartisanship. It was signed into law by President Bush and supported by many 

members of this committee on both sides of the aisle including the chairmen of this 

subcommittee and of the full committee. 

We cannot pretend that industry does not have good intentions or that Federal 

regulations are the root of all economic problems. We must all work together if want 

215 

to find the best solutions to invest in our future and secure our energy independence 

and security. 

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