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82–945 2013

AMERICAN ENERGY SECURITY AND INNOVATION: 

GRID RELIABILITY CHALLENGES IN A SHIFTING 

ENERGY RESOURCE LANDSCAPE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

MAY 9, 2013 

Serial No. 113–40 

( 

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 

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 

RALPH M. HALL, Texas 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

LEE TERRY, Nebraska 

MICHAEL C. BURGESS, Texas 

ROBERT E. LATTA, Ohio 

BILL CASSIDY, Louisiana 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

BOBBY L. RUSH, Illinois 

Ranking Member 

JERRY MCNERNEY, California 

PAUL TONKO, New York 

EDWARD J. MARKEY, Massachusetts 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN D. DINGELL, Michigan 

HENRY A. WAXMAN, California (ex officio) 

(V) 

C O N T E N T S 

Page 

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

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

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

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

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

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

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

Prepared statement .......................................................................................... 6 

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

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

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

WITNESSES

Gary Sypolt, CEO, Dominion Energy, on behalf of Interstate Natural Gas 

Association of America ......................................................................................... 9 

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

John Shelk, President and CEO, Electric Power Supply Association ................. 24 

Prepared statement .......................................................................................... 26 

Answers to submitted questions ...................................................................... 144 

Paul Cicio, President, Industrial Energy Consumers of America ........................ 40 

Prepared statement .......................................................................................... 42 

Answers to submitted questions ...................................................................... 146 

Daniel Weiss, Senior Fellow and Director of Climate Strategy, Center for 

American Progress ............................................................................................... 49 

Prepared statement .......................................................................................... 51 

Robert Gramlich, Interim CEO, American Wind Energy Association ................ 78 

Prepared statement .......................................................................................... 80 

Answers to submitted questions ...................................................................... 157 

Jonathan Lesser, President, Continental Economics, Inc. ................................... 86 

Prepared statement .......................................................................................... 88 

Answers to submitted questions ...................................................................... 163 

SUBMITTED MATERIAL

Letter of May 8, 2013, from the Natural Gas Council to the Subcommittee, 

submitted by Mr. Whitfield ................................................................................. 137 

Letter of May 9, 2013, from the American Public Power Association to the 

Subcommittee, submitted by Mr. Whitfield ....................................................... 139 

(1) 

AMERICAN ENERGY SECURITY AND INNOVATION: GRID RELIABILITY CHALLENGES IN A 

SHIFTING ENERGY RESOURCE LANDSCAPE 

THURSDAY, MAY 9, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND POWER, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:05 a.m., in room 

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

of the subcommittee) presiding. 

Present: Representatives Whitfield, Hall, Shimkus, Pitts, Burgess, Latta, Cassidy, Olson, McKinley, Gardner, Pompeo, 

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

Tonko, Green, Capps, Barrow, Christensen, Castor, and Waxman 

(ex officio). 

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

Press Secretary; Sean Bonyun, Communications Director; Matt 

Bravo, Professional Staff Member; Allison Busbee, Policy Coordinator, Energy & Power; Patrick Currier, Counsel, Energy & Power; 

Tom Hassenboehler, Chief Counsel, Energy & Power; Jason Knox, 

Counsel, Energy & Power; Mary Neumayr, Senior Energy Counsel; 

Tom Wilbur, Digital Media Advisor; Jeff Baran, Minority Senior 

Counsel; Kristina Friedman, Minority EPA Detailee; Caitlin 

Haberman, Minority Policy Analyst. 

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

Mr. WHITFIELD. The hearing will come to order. 

I certainly want to thank the panel of witnesses for being with 

us today. All of you are experts in your field, and we value your 

testimony, and certainly I will be introducing each one of you individually as soon as we finish our opening statements, but the hearing this morning is entitled ‘‘American Energy Security and Innovation: Grid Reliability Challenges in a Shifting Energy Resource 

Landscape.’’ 

Today’s discussion builds on earlier hearings that address the 

challenges posed by changes in the Nation’s electricity generation 

portfolio. The proportion of electricity we get from coal, natural gas, 

nuclear, hydroelectric and non-hydro renewables has remained relatively constant over the last several decades. However, a shift is 

occurring, and what is alarming is how fast the mix has changed 

2 

during the past few years. And it is this rapid transition that presents a number of pressing concerns that must be addressed in 

order to ensure a reliable and affordable electricity supply. 

Most significantly, we are seeing a sharp drop in coal use and 

its replacement with natural gas. Part of this is due to market 

forces, namely the increased supply and relatively low price of domestic natural gas, but also part is the result of policy decisions 

made in Washington, particularly EPA’s regulatory bias against 

coal. 

Policy decisions are also behind the increased use of intermittent 

renewable resources, such as wind and solar power, especially the 

generous federal tax breaks and subsidies that favor them, as well 

as state level renewable electricity mandates. There certainly is 

room for debate of the merits of these policies and decisions and 

their impacts on electricity consumers and the American economy. 

I for one am opposed to EPA’s regulatory onslaught and will continue to oppose anti-coal rules because, like the President, I agree 

that we need all of the above, even though I think he wants to omit 

coal. But the point of this hearing is that these changes to the generation mix are occurring, and it is important that we think 

through what must be done to ensure that the lights stay on and 

that electric bills are affordable in the years ahead. 

For example, the increased use of natural gas to provide electricity cannot go smoothly unless we have the pipeline capacity to 

carry it from where it is produced to the many new natural gasfired power plants that are being built. We will need new natural 

gas pipelines as well as storage facilities to be constructed. However, we don’t have a lot of time to build them, given the reliability 

challenges we face today, and we have already witnessed this scenario in areas like New England. 

In addition, the federal-state policies that have given a boost to 

intermittent power sources could easily backfire if we don’t address 

the difficulties of integrating these intermittent sources into the 

electric grid and the additional cost that that requires. Homeowners and businesses need electricity, whether or not the sun is 

shining or the wind is blowing, and the supply at any moment 

must meet the demand. This is nearly impossible to do with intermittent renewables that are not readily and reliably available. 

I might also add that the long-term subsidization of certain generation sources, such as wind, can impair reliability and drive up 

electricity prices and increase integration costs. The wind PTPC 

was extended the end of last year, much to the disappointment of 

many of us. That extension alone is expected to cost over $12 billion over the next 10 years. And then, as many of you know, in 

January, EPA even made a decision in a ruling to exempt from the 

Clean Air Act emissions from generators that are used to back up 

wind power, and I recall that when we had our three forums on 

the Clean Air Act, many people said, well, you are out to destroy 

the Clean Air Act. We were not exempting anything from the Clean 

Air Act. We were simply having discussions with local regulators 

of the impact of the Clean Air Act and yet here EPA is exempting 

from the Clean Air Act backup generators for the wind—wind 

power. 

3 

The electric sector is changing, but one thing that remains constant is that homeowners, small business owners, manufacturers 

and others need reliable and affordable electricity. If we are going 

to be competitive in the global marketplace, we must do everything 

possible to ensure affordable and abundant electricity. 

With that, at this time, I would like to recognize the distinguished gentleman from Illinois, Mr. Rush, for 5 minutes. 

[The prepared statement of Mr. Whitfield follows:] 

PREPARED STATEMENT OF HON. ED WHITFIELD

This hearing is entitled ‘‘American Energy Security and Innovation: Grid Reliability Challenges in a Shifting Energy Resource Landscape.’’ Today’s discussion 

builds on earlier hearings that addressed the challenges posed by changes in the 

nation’s electricity generation portfolio. 

The proportion of electricity we get from coal, natural gas, nuclear, hydroelectric, 

and non-hydro renewables has remained relatively constant over the last several 

decades. However, a shift is occurring and what is alarming is how fast the mix has 

changed during the past few years. And it is this rapid transition that presents a 

number of pressing concerns that must be addressed in order to ensure a reliable 

and affordable electricity supply. 

Most significantly, we are seeing a sharp drop in coal use and its replacement 

with natural gas. Part of this is due to market forces, namely the increased supply 

and relatively low price of domestic natural gas. But part is also the result of policy 

decisions made in Washington, particularly EPA’s regulatory attack on coal. 

Policy decisions are also behind the increase in intermittent renewable resources 

such as wind and solar power, especially the generous federal tax breaks and subsidies that favor them as well as state-level renewable electricity mandates. 

There certainly is room for debate over the merits of these policy decisions and 

their impacts on electricity consumers and the American economy. I for one strongly 

oppose EPA’s regulatory onslaught and will continue to fight against these anti-coal 

rules. But the point of this hearing is that these changes to the generation mix are 

occurring, and it is important that we think through what must be done to ensure 

that the lights stay on and that electric bills are affordable in the years ahead. 

For example, the increased use of natural gas to produce electricity cannot go 

smoothly unless we have the pipeline capacity to carry it from where it is produced 

to the many new natural gas-fired power plants that are being built. We will need 

new natural gas pipelines as well as storage facilities to be constructed. However, 

we don’t have a lot of time to build them given the reliability challenges we face 

today and we have already witnessed this scenario in areas like New England. And 

I might add that although Keystone XL is an oil pipeline and not directly relevant 

to this discussion about electricity, the fact that Keystone XL has been delayed for 

over four years by this administration is a warning sign that this administration 

is no friend of building new pipeline infrastructure to transport fossil energy. 

In addition, the federal and state policies that have given a boost to wind and 

solar power could easily backfire if we don’t address the difficulties of integrating 

these intermittent sources into the electric grid. 

Homeowners and businesses need electricity whether or not the sun is shining or 

the wind is blowing, and the supply at any moment must match the demand. This 

is nearly impossible to do with intermittent renewables that are not readily available. 

I might also add that the long-term subsidization of certain generation sources, 

such as wind, can impair reliability and drive up electricity prices. The Wind PTC 

was extended at the end of last year much to the disappointment of many of us. 

That extension alone is expected to cost over $12 Billion dollars over the next 10 

years. To put that in perspective, $12 billion is more than 10% of the entire $90 

billion dollar sequester. In fact, $12 billion is six times more than the cost of the 

president’s own proposal to create a $2 billion dollar Advanced Energy Trust Fund 

over the next decade. And what will the American taxpayer receive in return for 

subsidizing the wind industry for another 10 years? More expensive and less reliable energy. 

The electric sector is changing, but one thing that remains constant is that homeowners, small business owners, manufacturers and others still need reliable and affordable electricity. I look forward to learning from our witnesses as to how best to 

accommodate the changes that are underway. 

4 

# # # 

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

Mr. RUSH. I want to thank you, Mr. Chairman, for holding today’s hearing on, ‘‘Grid Reliability Challenges in a Shifting Energy 

Resource Landscape.’’ Mr. Chairman, my question is, can we just 

come up with an acronym for all these words, this long title? 

As the title of this hearing suggests, the country is indeed in a 

period of transition in an area of electricity generation away from 

some of the older, dirtier carbon-intensive coal-fired power plants 

and towards a heavy reliance on natural gas and renewable source 

of energy, including wind and solar and hydropower to generate 

electricity. 

Twenty years ago, Mr. Chairman, coal accounted for over 50 percent of all power generation in this Nation while natural gas was 

responsible for less than 15 percent of electric generation. Today, 

Iowa, due to a combination of technological advancement in producing renewable energy, State and Federal incentives, environmental policies and market-based realities, the U.S. power supply 

is much more diversified with 37 percent of electricity generation 

coming from coal, 30 percent coming from natural gas, 19 percent 

from nuclear and 12 percent from renewable sources, including hydropower. 

Mr. Chairman, this diversification of the Nation’s power supply 

is a sign of the times as we move toward the 21st Century model, 

which does not rely too heavily on any single carbon-intensive energy source. Instead, by moving forward and diversifying our electric power supply to include more natural gas and clear renewable 

forms of energy, the U.S. is leading all advanced nations in decreasing our carbon emissions while also providing the energy necessary to provide for the needs of the American consumers and 

America’s businesses. 

According to the EIA in 2012, U.S. energy-related combustion 

emissions declined 3.7 percent to 1994 levels as a result of slow 

economic growth, the accelerating use of renewable energy sources 

and the transition from coal to natural gas. So, Mr. Chairman, 

while this reduction in carbon emissions is commendable, there is 

still a whole lot more that we have to do, more work that needs 

to be done. U.S. energy related carbon emissions is currently 5 percent above 1990 levels, and without additional policies, the EIA 

predicts that carbon pollution will continue to grow by 7.5 percent 

between 2012 and 2040. 

President Obama has pledged to cut carbon emissions by 17 percent between 2005 levels—below 2005 levels by 2020 in order to 

help combat the devastating effect of climate change that we have 

been experiencing much too frequently. And in order to do so, we 

must continue to integrate renewable forms of energy into the electric power supply. Of course, as we continue to integrate renewable 

sources of anything into the power grid, natural gas will play a 

larger role in helping to avoid possible reliability issues. 

Additionally, Mr. Chairman, we must encourage and promote the 

development of advanced technologies and best practices to help inVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
5 

tegrate renewable energy sources into the grid while maintaining 

reliability. We must ensure that FERC has the tools and the capability to remove barriers to integration. 

Mr. Chairman, order 764 IRERs, which is the Integration of Reliable Energy Resources, which was finalized in June of 2012, is a 

clear example of FERC’s ability to integrate renewable power into 

the grid while also helping to ensure that American families and 

American businesses have access to reliable and affordable energy. 

Mr. Chairman, we must continue on this path of diversifying our 

Nation’s power supply with cleaner, renewable sources of energy 

and while also making sure that FERC can and that the relevant 

agencies can and have the authority and the capabilities to keep 

America’s lights on. 

Thank you, and I yield back. 

Mr. WHITFIELD. Gentleman’s time has expired. 

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

Upton, for 5 minutes. 

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

Mr. UPTON. Well, good morning. Today we are going to examine 

two key emerging issues facing the reliability of the Nation’s electric grid, gas and electric convergence challenges and the integration of intermittent renewable energy resources. 

As we have witnessed over the last couple of years, the Nation’s 

electric generation portfolio is undergoing a dramatic shift, in part 

spurred by abundant and low-cost natural gas but also driven by 

environmental regs from the EPA that are forcing thousands of 

megawatts of coal-fired base load power to retire. This committee 

is dedicated to ensure the continued availability of affordable and 

reliable power to American homes and businesses, all the while 

protecting jobs in this rapidly changing energy landscape. 

The shale gas revolution that we are witnessing today clearly 

presents enormous economic benefits for the country, and it is 

going to be an important driver of our economic growth moving forward. It is also going to set a path toward a better future for all 

of us, providing benefits across numerous sectors from manufacturing, residential to commercial uses. 

Generating more electric power from natural gas has many benefits as well, especially given that domestic supplies are increasing 

and current prices are relatively low, but we are learning that 

there are also some real challenges to integrating more natural gas 

in the power sector. 

Today’s hearing also will focus on the increased integration of 

intermittent renewable resources, such as wind and solar, into the 

electric grid. As I have said on many times, many occasions, I support an open, all of the above, energy strategy, which includes renewable energy resources. However, we have got to be careful with 

regard to the cost of these resources and the taxpayer dollars that 

continue to subsidize them. We must also be mindful of the fact 

that incorporating an increased amount of renewables into the electric system presents operational challenges that in fact may impair 

with reliability. These resources are intermittent by their nature. 

The wind doesn’t always blow, and the sun doesn’t always shine. 

6 

Clearly, there is a role that these resources can play and should 

play, but to suggest that these sources alone can meet the power 

demands of the manufacturing technology and consumer sectors of 

the U.S. economy is a stretch of the imagination. Absent the continued use of our reliable and consistent base load power workhorses, like coal, nuclear, natural gas, the U.S. will not be able to 

compete globally. 

America’s newfound abundance of natural gas is a blessing, as 

are technological advances that make renewables more cost competitive and reliable. Both of these resources should and will play 

an important role in contributing to our energy needs, but we have 

got to take steps to properly and cost effectively integrate those resources into the energy and electric portfolio. 

I look for forward to today’s testimony, welcome our witnesses 

and would yield to other members on the Republican side. Seeing 

none, I yield back. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Today we examine two key emerging issues facing the reliability of the nation’s 

electric grid—gas and electric convergence challenges and the integration of intermittent renewable energy resources. 

As we have witnessed over just the last few years, the nation’s electric generation 

portfolio is undergoing a dramatic shift, in part spurred by abundant and low cost 

natural gas, but also driven by environmental regulations from the EPA that are 

forcing thousands of megawatts of coal-fired baseload power to retire. This committee is dedicated to ensuring the continued availability of affordable and reliable 

power to American homes and businesses, all the while protecting jobs in this rapidly changing energy landscape. 

The shale gas revolution we are witnessing clearly presents enormous economic 

benefits for the country that will be an important driver of our economic growth 

moving forward. It will set a path toward a better future for all of us, providing 

benefits across numerous sectors from manufacturing, residential, to commercial 

uses. 

Generating more electric power from natural gas has many benefits as well, especially given that domestic supplies are increasing and current prices are relatively 

low. But we are learning that there are also some very real challenges to integrating 

more natural gas into the power sector. 

Today’s hearing also will focus on the increased integration of intermittent renewable resources, such as wind and solar, into the electric grid. As I have made clear 

on numerous occasions, I support an open, all-of-the-above energy strategy, which 

includes renewable energy resources. However, we must be mindful of the cost of 

these resources and the taxpayer dollars that continue to subsidize them. 

We must also be mindful of the fact that incorporating an increasing amount of 

renewables into the electric system presents operational challenges that may impair 

grid reliability. These resources are intermittent by their nature—the wind doesn’t 

always blow and the sun doesn’t always shine. Clearly there is a role these resources can play but to suggest these sources alone can meet the power demands 

of the manufacturing, technology, and consumer sectors of the U.S. economy is a 

stretch of the imagination. Absent the continued use of our reliable and consistent 

baseload power work horses like coal, nuclear, and natural gas, the U.S. will not 

be able compete globally. 

America’s newfound abundance of natural gas is a blessing, as are technological 

advancements that make renewables more cost competitive and reliable. Both of 

these resources should—and will—play an important role in contributing to our energy needs. But we need to take steps to properly and cost-effectively integrate 

these resources into the electricity portfolio. I look forward to today’s testimony, and 

learning about the best ideas for moving forward. 

7 

# # # 

Mr. WHITFIELD. Gentleman yields back. 

At this time, recognize the gentleman from California, Mr. Waxman, for 5 minutes. 

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

Mr. WAXMAN. Thank you, Mr. Chairman. 

Today, the subcommittee is holding its third hearing on America’s evolving electricity generation portfolio, and there is no question that a significant transition is under way. 

Renewable energy policies are paying off. We have doubled our 

capacity to generate renewable electricity from wind and solar in 

just 4 years. Cheap natural gas is also helping to transform our 

electricity sector. This market reality is causing some utilities to 

replace their oldest, dirtiest and least efficient coal plants with natural gas generation. 

These are positive developments, but these changes also create 

challenges for our electric grid. The testimony from the prior hearings showed that these issues are manageable and that both regulators and grid operators are focused on them. Yet there has been 

no focus from the Republican Members on the bigger challenges 

posed by climate change, and while they are ignoring climate 

change, they seem to bemoan the transition that is occurring. 

While they call for a market based economy, they don’t seem to like 

the fact that the market economy is driving natural gas to replace 

coal. They seem to want to use coal no matter what. Don’t let the 

market decide it; let’s let the coal people decide it. They offer no 

solutions, no ideas for cutting carbon pollution or deploying more 

clean energy generation. Instead, the only thing that seems to 

unite them is attacking EPA. They attack EPA’s air quality standards and lament the loss of coal’s market share. 

There is a confused aspect to these hearings. Some Republican 

Members cannot seem to decide whether they like cheap natural 

gas or see it as a threat that must be overcome to protect the coal 

industry. They seem unsure whether they should be celebrating reduced carbon pollution or avoiding the issue all together. This confusion is not surprising because the subcommittee still hasn’t examined why this transition in our energy sector must occur. 

Climate change is the biggest energy challenge we face as a 

country. We can’t have a meaningful discussion of the transition 

under way in the energy sector without understanding the threat 

of climate change. We have heard a lot lately about U.S. carbon dioxide emissions being at their lowest level in 20 years. The implication is no further action to address climate change is necessary, 

and that is simply not the case. 

As a result of increased renewable energy generation, a shift 

from coal to natural gas generation and the economic recession, 

U.S. emissions from the energy sector have dropped in recent 

years, but U.S.—total U.S. emissions from all sources, not just the 

power sector, actually increased from 2009 to 2011. What matters 

most is whether U.S. emissions are on track to decline in the fuVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
8 

ture by the amount needed to prevent dangerous climate change. 

No reputable expert believes this to be the case. 

Scientists tell us that our emissions need to decline by at least 

80 percent below 1990 levels by 2015 to avoid a dangerous level of 

warming. The latest projections by the Energy Information Administration show that U.S. carbon dioxide emissions from fossil fuel 

combustion actually will be 13 percent higher than 19 levels in 

2040, the last year of the EIA’s model. There is an enormous gulf 

between what these emissions will be without additional action and 

what they need to be to avert catastrophic warming. 

Today’s hearing continues this unfortunate and counterproductive trend. The majority appears to have called this hearing, 

in part, to invite attacks on renewable energy. If we are going to 

hear from opponents of renewable energy and critics of EPA’s proposed standards to reduce carbon pollution from new power plants, 

we should hear from the scientists and technical experts who can 

explain why it is so important for the United States to reduce its 

carbon pollution. We should hear from witnesses who can inform 

the subcommittee about the dangers of manmade climate change 

and the closing window for effective action. The threat of climate 

change is not going to disappear if we pretend it doesn’t exist. We 

need to start recognizing reality and crafting responsible solutions. 

[The prepared statement of Mr. Waxman follows:] 

PREPARED STATEMENT OF HON. HENRY A. WAXMAN

Today, the Subcommittee is holding its third hearing on America’s evolving electricity generation portfolio. There is no question that a significant transition is underway. 

Renewable energy policies are paying off. We have doubled our capacity to generate renewable electricity from wind and solar in just four years. 

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

reality is causing some utilities to replace their oldest, dirtiest, and least efficient 

coal plants with natural gas generation. 

These are positive developments. But these changes also create challenges for our 

electric grid. The testimony from the prior hearings showed that these issues are 

manageable and that both regulators and grid operators are focused on them. 

Yet there has been no focus from the Republican members on the bigger challenges posed by climate change. They offer no solutions . no ideas for cutting carbon 

pollution or deploying more clean energy generation. Instead, they attack EPA’s air 

quality standards and lament the loss of coal’s market share. 

There is a confused aspect to these hearings. Some Republican members cannot 

seem to decide whether they like cheap natural gas or see it as a threat that must 

be overcome to protect the coal industry. They seem unsure whether they should 

be celebrating reduced carbon pollution or avoiding the issue all together. 

This confusion is not surprising because the Subcommittee still hasn’t examined 

why this transition in our energy sector must occur. Climate change is the biggest 

energy challenge we face as a country. We can’t have a meaningful discussion of 

the transition underway in the energy sector without understanding the threat of 

climate change. 

We have heard a lot lately about U.S. carbon dioxide emissions being at their lowest level in twenty years. The implication is that no further action to address climate change is necessary. That is simply not the case. 

As a result of increased renewable energy generation, a shift from coal to natural 

gas generation, and the economic recession, U.S. emissions from the energy sector 

have dropped in recent years. But total U.S. emissions from all sources—not just 

the power sector—actually increased from 2009 to 2011. 

What matters most is whether U.S. emissions are on track to decline in the future 

by the amount needed to prevent dangerous climate change. No reputable expert believes this to be the case. 

Scientists tell us that our emissions need to decline by at least 80% below 1990 

levels by 2050 to avoid a dangerous level of warming. The latest projections by the 

9 

Energy Information Administration show that U.S. carbon dioxide emissions from 

fossil fuel combustion actually will be 13% higher than 1990 levels in 2040, the last 

year in EIA’s model. There is an enormous gulf between what these emissions will 

be without additional action and what they need to be to avert catastrophic warming. 

Today’s hearing continues this unfortunate and counterproductive trend. The majority appears to have called this hearing, in part, to invite attacks on renewable 

energy. If we’re going to hear from opponents of renewable energy and critics of 

EPA’s proposed standard to reduce carbon pollution from new power plants, we 

should hear from the scientists and technical experts who can explain why it is so 

important for the United States to reduce its carbon pollution. We should hear from 

witnesses who can inform the Subcommittee about the dangers of man-made climate 

change and the closing window for effective action. 

The threat of climate change is not going to disappear if we pretend it doesn’t 

exist. We need to start recognizing reality and crafting responsible solutions. 

Mr. WHITFIELD. Gentleman yields back. At this time, I would like 

to introduce the members of the panel, and as I said in the beginning, we genuinely appreciate all of you being here, and we certainly value your input and thought on these important issues. 

STATEMENTS OF GARY SYPOLT, CEO, DOMINION ENERGY, ON 

BEHALF OF INTERSTATE NATURAL GAS ASSOCIATION OF 

AMERICA; JOHN SHELK, PRESIDENT AND CEO, ELECTRIC 

POWER SUPPLY ASSOCIATION; PAUL CICIO, PRESIDENT, INDUSTRIAL ENERGY CONSUMERS OF AMERICA; DANIEL 

WEISS, SENIOR FELLOW AND DIRECTOR OF CLIMATE 

STRATEGY, CENTER FOR AMERICAN PROGRESS; ROBERT 

GRAMLICH, INTERIM CEO, AMERICAN WIND ENERGY ASSOCIATION; AND JONATHAN LESSER, PRESIDENT, CONTINENTAL ECONOMICS, INC. 

Mr. WHITFIELD. First, we have Mr. Gary Sypolt, who is the CEO 

of Dominion Energy, who is going to be testifying on behalf of the 

Interstate Natural Gas Association of America. 

We have Mr. John Shelk, who used to be a part of the Energy 

and Commerce Committee. I was going to say many, many years 

ago, but it wasn’t that many years ago. 

Mr. SHELK. Lincoln was the—— 

Mr. WHITFIELD. And John is the president and CEO of Electric 

Power Supply Association. 

We have Mr. Paul Cicio, who is the president of the Industrial 

Energy Consumers of America. We have Mr. Daniel Weiss, who has 

testified here before, and he is the senior fellow and director of climate strategy for the Center for American Progress. 

We have in Robert Gramlich, who is the interim CEO of the 

American Wind Energy Association. 

And we have Dr. Jonathan Lesser, who is the president of Continental Economics, Incorporated. 

So, once again, welcome to all of you. We look forward to your 

testimony. I will be recognizing each one of you and you will be 

given 5 minutes for an opening statement, and then, at the end, 

at the conclusion of that, we will have questions and answers. 

So, Mr. Sypolt, you are recognized for 5 minutes. 

STATEMENT OF GARY SYPOLT 

Mr. SYPOLT. Chairman Whitfield, Ranking Member Rush, members of the subcommittee, good morning. My name is Gary Sypolt. 

10 

I am CEO of Dominion Energy. Headquartered in Richmond, Virginia, Dominion operates a broad portfolio of energy assets, including electric generation and transmission, natural gas transmission, 

storage and distribution. Dominion Energy, the segment of the 

company that I oversee, is focused on our natural gas assets. 

Today I am testifying on behalf of the Interstate Natural Gas Association of America or INGAA. INGAA represents interstate pipeline, natural gas transmission pipeline operators in the U.S. and 

Canada. I am a member of the INGAA board and the chair of the 

board’s task force on gas electric power reliability. 

You are all aware of the shale gas revolution, the new opportunities that it has created for the U.S. economy and the rapid changes 

that have occurred as a result. 

One of the principal areas in which this has occurred is in the 

use of natural gas as a fuel for electric power generation. There is 

no question that natural gas and natural gas pipelines can serve 

gas-fired electric power generators reliably. Questions about whether and to what extent natural gas is used to generate electricity 

will be resolved by the generators and by policymakers. If natural 

gas continues to be chosen as a fuel prepared generation, though, 

the pipeline industry is confident that it can reliably meet the 

needs of power customers, assuming that such customers contract 

for the appropriate level of pipeline services. 

Concerns about natural gas electric power reliability vary by region and depend on several factors referenced by my written testimony. New England has attracted the greatest concern in recent 

years, but it is not the only region where this concern has been 

raised by grid operators and other stakeholders. The problem in 

New England is that wholesale electric market rules do not allow 

generators to recover the cost associated with ensuring electric reliability, and electric prices do not reflect these reliability costs. 

While generators in New England are acting rationally based on 

current market rules, the end result may be a reduction in electric 

reliability and a greater risk of blackouts that could be very costly 

to the region. 

The good news is that the interstate natural gas pipeline industry has a proven track record for building infrastructure in response to market demand. In my written testimony, you can see a 

map of the 12,000 miles of new pipelines placed in service over the 

last decade. If the market provides timely signals that it needs additional capacity, that is, in the form of firm contractual commitments for that capacity, the industry can add new pipeline capacity 

in a market responsive manner. 

The key point here, pipelines are designed to meet the needs of 

shippers with firm contracts. Unlike electric utilities, pipelines 

typically are designed with little or no excess capacity. In other 

words, there is no reserve margin. This is why firm contracts for 

pipeline service are critical, and in fact, the FERC looks at a firm 

contractual commitment in deciding whether to approve a new 

pipeline in the first place; in other words, whether the pipeline 

meets the public convenience and necessity. 

Restructuring of wholesale natural gas markets has been a remarkable success. As demonstrated by the robust pipeline expansion over the last decade, the natural gas model works. This sucVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
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cess should not be undermined as policymakers examine how to 

achieve greater natural gas and electric power market coordination. Electric market rules must be reformed to value investments 

in reliability and to ensure the ability to recover such costs from 

those who benefit from reliable electricity. With such arrangements, necessary natural gas infrastructure can and will be built. 

Without such arrangements, the gas side risk, degradation of the 

quality of service for natural gas utilities and traditional gas pipeline customers who pay for reliable service, while on the electric 

side, there would be a greater risk if parts of the nation would experience more volatile power prices and increasing potential for 

blackouts. 

Let me thank the subcommittee for the opportunity to testify 

today, and I will be happy to answer questions at the appropriate 

time. Thank you. 

[The prepared statement of Mr. Sypolt follows:] 

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Mr. WHITFIELD. Thanks, Mr. Sypolt. 

Mr. Shelk, you are recognized for 5 minutes. 

STATEMENT OF JOHN SHELK 

Mr. SHELK. Thank you. Good morning, Chairman Whitfield, 

Ranking Member Rush and members of the subcommittee. As a 

former committee counsel, it is a particular honor to be back today. 

As noted, I am here on behalf of the Electric Power Supply Association. EPSA is the national trade association for competitive wholesale electricity suppliers. Our members supply electricity across the 

country with a particular emphasis on states and regions with 

independent grid operators. This means their major sources of electricity from Maine down here to Virginia and states across from 

the Mid-Atlantic to my home State of Illinois, and particularly in 

Texas and California. 

The subcommittee is wise to focus on the challenges already discussed. Today’s headlines focus on natural gas, but we should also 

be asking ourselves, what will be the headlines of tomorrow? What 

will be the game changers next year or over the next decade? EPSA 

believes that competitive electricity markets are best able to adapt 

to these changes, and our written testimony focuses on three particular challenges that I will summarize now: electric-gas coordination; a new topic that Chairman Whitfield referred to called demand response; and finally, variable resources. 

First on electric gas coordination, I think it is important to point 

out that gas-fired generators already have as much interest and financial incentive as anyone in making sure gas could be delivered 

to their power plants to generate electricity. This is because, in 

competitive markets such as New England and Texas and elsewhere, these plants do not earn revenue from generating electricity 

unless they can get gas to run. They do not have a regulated rate 

base. 

The important message we would leave with you is that today 

and going forward, these plants procure fuel many ways, only one 

of which is through a firm long-term transportation arrangement 

that the pipelines just referred to. Instead, power plants today 

serve consumers of electricity reliably as well as cost effectively 

many other options: packaged products from producers and gas 

marketers with packages that include both the gas supply and the 

transportation, interruptible service, capacity release, and delivery 

from gas distribution utilities. These generators need continued access to this full suite of options to tailor their gas supply arrangements to the type of plant, location and market being served. These 

options generally work well, as evidenced by the substantial increased utilization of gas-fired power plants that many of you have 

already referred to. 

We are in agreement with INGAA that electric gas issues vary 

by region, and regional solutions are best. And FERC is acting accordingly. FERC and grid operators are vigilant, as you heard at 

the hearing last month. New England is appropriately seen as the 

region with the most pressing challenges, and our regional trade 

association there is co-chairing the regional effort, looking at these 

issues in depth. 

25 

FERC recently acted to improve the scheduling times for gas and 

electricity, which will help, and active consideration is being given 

at the state level to possibly encouraging gas utilities to procure 

more firm pipeline capacity, but the regional market is also looking 

to actively consider changes to electric market rules. 

The second topic I would like to mention is one not often considered here but should be, and that is called demand response. Demand Response entails programs in which most energy consumers, 

particularly residential and commercial customers, pay others, primarily industrial customers, for them to use less electricity. In 

what is called order 745, FERC went beyond its authority, in our 

view and the view of the other national electricity associations, to 

pay this demand response as if it were generation, and we and 

those other associations are presently in the Federal court here in 

the District of Columbia and the Court of Appeals challenging that 

order. 

No amount of demand response can substitute for the substantial 

supplies of actual megawatts from real power plants of all kinds 

needed to continue to serve consumers reliably. This year, as 

Chairman Whitfield mentioned, EPA issued a rule exempting behind-the-meter diesel generators from Clean Air Act requirements 

applicable to other generators. This allows owners of these unregulated diesel generators to link up as virtual power plants to merely 

shift, not actually reduce their demand, and still get paid by other 

consumers as demand response. 

This diverts consumer dollars away from cleaner generation. 

This has also been flagged as a reliability concern and PJM by the 

independent market monitor. Demand response subsidies and policies deserve greater scrutiny as, at present, they adversely impact 

every supply option, gas, coal, nuclear and renewables. 

And on the third challenge in terms of intermittent resources, 

the point we would leave with you is really twofold. One is that the 

larger regional markets that we favor because they are larger, can 

handle the intermittent resources better, and the natural gas-fired 

power plants that are needed to back up these intermittent resources need to be properly compensated. 

And with that, I thank you for the opportunity to be here, and 

we look forward to the questions. 

[The prepared statement of Mr. Shelk follows:] 

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Mr. WHITFIELD. Thanks very much. 

And Mr. Cicio, you are recognized for 5 minutes. 

STATEMENT OF PAUL CICIO 

Mr. CICIO. Thank you. Mr. Chairman, Ranking Member Rush, 

members of the subcommittee, thank you for the opportunity to be 

here. My name is Paul Cicio, and I am the president of the Industrial Energy Consumers of America. IECA is a trade association. 

Our manufacturing companies have revenues of $1.3 trillion, over 

1,500 major manufacturing facilities across the United States, and 

we employ some 1.7 million people. 

IECA companies are mostly energy intensive trade exposed industries. This means that they are substantial consumers of natural gas and electricity and that relatively small changes in the 

price of energy can have a significant impact on competitiveness 

and jobs. The industrial sector uses about one-third of the U.S. natural gas and one-third of the U.S. electricity. 

The key message of this testimony to Congress is that consumers 

are not being served by a combination of actions and inactions by 

policymakers, all of which potentially threaten electric and natural 

gas reliability. 

Because the electric reliability is dependent upon natural gas 

pipeline capacity reliability and that no federal agency apparently 

has responsibility for oversight of natural gas pipeline reliability 

means, in general, that no one in Washington is in charge of reliability. The U.S. cannot have electric reliability without having 

natural gas pipeline reliability. 

Everyone is aware of the northeast corridor pipeline constraints 

and how it increased prices. Thankfully, policymakers are working 

to resolve the problem. 

What IECA is worried about is what we do not know about the 

pipeline constraints in other parts of the country. The question that 

keeps us up at night is, given the momentous market changes 

under way over the next 4 years, at peak natural gas demand periods like very hot summer days or very cold winter nights, will 

there be adequate natural gas pipeline capacity for all natural gas 

consumers? 

While the North American Electric Reliability Corporation, 

NERC, has responsibility for overseeing electric reliability and appears to be doing a good job, there is no such organization for overseeing natural gas pipeline capacity reliability. FERC has authority 

over most aspects of natural gas pipelines but not reliability. Their 

view—they view reliability as responsibility of the market. The decision to build a pipeline is a market decision, not a regulatory decision, and we agree with that premise. 

While the premise of a pipeline decision to build or not build has 

not changed and shouldn’t change, the market it serves has 

changed profoundly in several complicated ways that greatly increased the potential for reliability problems that never existed before, all at the same time and over a compressed period of time. 

And we must be mindful that potential solutions in this arena are 

capital intensive and where timely environmental permitting is a 

huge obstacle to speed. These facts make a compelling case for 

41 

what oversight and studies evaluating reliability at future peak demands are necessary to prevent future reliability problems. 

In contrast, for electric reliability, NERC is doing studies to encompass the country to evaluate and provide vital information that 

supports pre-emptive action by policymakers and markets to guard 

against electric reliability problems. 

The recent study completed by the Midwest Independent System 

Operator, MISO, clearly demonstrates the need for greater oversight and study. The MISO study concluded, in the short term, 

more than 65 percent of the pipelines currently supplying gas to 13 

Midwest states has insufficient capacity to fully meet its needs 

from existing generating units. For the period 2016 to 2030, almost 

90 percent of the pipelines have insufficient capacity. The results 

of this study should have served as a red flag to policymakers, but 

it apparently has not had quite the effect that we would like. 

Lastly, how FERC and the regional markets respond to these 

challenges may result in consideration of policy changes that could 

be of concern to the industrial sector. For example, a FERC policy 

that gives certain rights and priorities to electric generators for access to natural gas pipeline capacity may provide potential solutions to electric generation reliability but creates reliability and 

cost problems for manufacturers. 

Mr. Chairman, in conclusion, reliability is an important safety 

and cost issue. Policymakers should not wait until there are rolling 

brownouts or blackouts to provide oversight of natural gas pipeline 

capacity. 

[The prepared statement of Mr. Cicio follows:] 

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Mr. WHITFIELD. Thanks very much. 

Mr. Weiss, you are recognized for 5 minutes. 

STATEMENT OF DANIEL WEISS 

Mr. WEISS. Chairman Whitfield, Ranking Member Rush and 

members of the subcommittee, thank you for the opportunity to testify on American energy security and innovation. Discussing electricity security while ignoring climate change is like discussing personal health while ignoring smoking, diet and exercise. We must 

acknowledge that our electricity generation system produces much 

of the carbon pollution responsible for climate change and that the 

effects of climate change impair electricity reliability. These threats 

include extreme weather events, storms, floods, droughts, heat 

waves and wild fires. 

The Congressional Research Service concluded in 2012 that, 

quote, ‘‘power delivery systems are most vulnerable to storms and 

extreme weather events,’’ unquote. Such events also threaten 

American lives, the economy and taxpayers. The 25 most severe extreme weather events in 2011 and 2012 caused 1,100 fatalities and 

$188 billion in damages. 

A Center for American Progress analysis found that federal nat- ural disaster relief recovery efforts cost taxpayers $136 billion in 

fiscal years 2011 through 2013, or 400 hours per household annually, and the National Climate Assessment Draft warns us that we 

can expect more extreme and severe weather in the future. 

Extreme weather interferes with electricity generation. The severe 2012 drought interrupted power production in many states by 

shrinking the amount of cooling water available for power plants. 

The drought also disrupted oil and natural gas production. 

Superstorm Sandy and other severe storms also disrupted electricity service by downing power lines and damaging facilities. We 

urge the subcommittee to support policies to achieve a more secure, 

reliable electricity system by accomplishing the following three 

goals. 

First, Congress must slow climate change by reducing carbon pollution from power plants, the largest uncontrolled source of emissions. Failing that, EPA must comply with the Supreme Court by 

setting such standards under the Clean Air Act. American Electric 

Power, Xcel and Entergy all testified before this subcommittee earlier this year in favor of legislation to address climate change. 

Second, continue to provide financial incentives for energy efficiency and renewable electricity technologies, which would reduce 

reliance on the polluting fossil fuels responsible for climate change, 

pay for them by adding tax breaks for big oil companies because 

they have received the most federal support over time. The Nuclear 

Energy Institute in a 2011 study found that over the past 60 years, 

70 percent of federal energy spending went to fossil fuels while 

only 10 percent went for renewables. In addition, in 2013, the 

North America Reliability Corporation found that, quote, ‘‘no significant reliability challenges that intermittent electricity exists.’’ 

And third, reduce the vulnerability of the electricity infrastructure to extreme storms, drought, sea level rise and other impacts 

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save money. The Federal Emergency Management Agency estiVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
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mates that, quote, ‘‘a dollar spent on pre-disaster mitigation saves 

society an average of $4 in lower damages.’’ 

Yet even as extreme weather increases, the federal government 

is investing less in community resilience. Representative Lois 

Capps and 39 colleagues have urged that the federal government 

undertake a resilience plan that, first, determines the financial 

support necessary to help communities prepare for future extreme 

weather events and creates a dependable revenue stream to provide additional resources for these community resilience programs. 

In addition, the Congressional Research Service recommends 

more investment in smart grid and transmission repairs to improve 

electricity reliability. The growing harm from climate change requires a prompt transition from dirty to cleaner electricity generation, which is begun both here and abroad. For instance, Iowa generates 20 percent of its electricity from wind. Six years after a devastating tornado, Greensburg, Kansas is, quote, ‘‘100 percent renewable energy 100 percent of the time,’’ unquote. Germany generated one quarter of its electricity from renewable sources over six 

months in 2012, so it can be done. 

Congress must adopt policies that speed this transition while 

helping our electricity system become more resilient to damages 

from climate related storms, floods, drought and other extreme 

weather. Thank you very much. 

[The prepared statement of Mr. Weiss follows:] 

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Mr. WHITFIELD. Thank you, Mr. Weiss. 

And Mr. Gramlich, you are recognized for 5 minutes. 

STATEMENT OF ROBERT GRAMLICH 

Mr. GRAMLICH. Thank you, Chairman Whitfield, Ranking Member Rush and subcommittee members. It is a pleasure to be here 

today on behalf of America’s wind industry. The American Wind 

Energy Association represents over 1,200 member companies, including project developers, manufacturers and service providers. 

Wind energy production has grown dramatically in recent years, 

lowering energy costs for consumers while keeping the grid reliable. 

Over the past 5 years, wind energy has accounted for more than 

35 percent of all new electric generating capacity in the U.S. Last 

year alone, $25 billion in private investment went into building 

new U.S. wind projects, providing 80,000 American jobs. The wind 

industry now has 550 manufacturing facilities in 44 states and 

wind projects in 39 states and Puerto Rico. Nearly 70 percent of 

the content used in U.S. wind turbines is produced here in America 

now, up from 25 percent just a few years ago. 

Last year, wind energy reliably provided more than 20 percent 

of the electricity in Iowa and South Dakota, and more than 10 percent of the electricity in nine states. At times, wind energy has reliably provided more than 55 percent of the electricity on the main 

utility system in Colorado and 35 percent on the main grid in 

Texas. 

Dozens of studies by independent grid operators and utilities 

have examined wind energy’s impact on electric reliability and all 

have concluded that our use of wind energy can increase many 

times over without any negative impacts on reliability. 

Since the days of Thomas Edison, grid operators have had to constantly adjust the output of power plants to respond to fluctuations 

in electricity demand and the sudden failures of large conventional 

power plants. All energy sources underperform from time to time 

and no power plant operates predictably 100 percent of the time. 

The lights stay on because all power plants have always backed 

up—been backed up by all other power plants. Wind energy follows 

the same market rules as other resources, pays for any costs it 

causes and only gets paid for the services it provides. 

Compared to wind energy, changes in electricity demand and 

failures at conventional power plants are far larger contributors to 

grid variability and the need for the flexible reserves or backup 

that grid operators use to keep supply and demand in balance. 

Grid operators that use efficient practices have found that they can 

reliably add large amounts of wind energy with virtually zero need 

for backup power beyond what is already needed. 

Even if power—even if additional reserves are needed, it is much 

cheaper to accommodate the slow and predictable variations in 

wind output than the instantaneous loss of conventional power 

plants that can occur at any time. Data from the Texas grid operator indicates that the additional cost of reserves for obtaining almost 10 percent of its electricity from wind energy accounts for 

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A study by utilities in Nebraska that the whole region reliably obVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00084 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
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tained 40 percent of its electricity from wind energy at an additional reserves cost of around 80 cents per monthly bill. In contrast, data indicates that the cost of reliably accommodating instantaneous outages at other power plants is 40 times higher, at 

around $2.50 per monthly bill. 

These reserves’ costs are a small fraction of the benefits wind energy provides for consumers. Wind energy drives down electricity 

prices by displacing higher cost, less efficient power plants. Wind 

energy also provides the stability of a long-term fixed energy price, 

which is offered by very few other energy sources. This protects 

consumers from fluctuations in fuel prices, much like a fixed-rate 

mortgage protects homeowners from interest rate spikes. 

Utilities understand that wind energy is a good deal for their 

customers. At least 74 utilities bought or owned wind power in 

2012, up 50 percent from a year ago. The Southern Company recently made its third wind energy purpose, explaining that wind 

energy reduces its customers’ electric bills. Similarly, Oklahoma 

Gas and Electric estimates that a single wind project will save Arkansas customers $46 million. 

Finally, the Colorado Public Utilities Commission found that a 

single wind purchase by Xcel Energy, quote, ‘‘will save rate payers 

$100 million,’’ unquote, while providing the opportunity to lock in 

a price for 25 years. In short, wind energy is playing a critical role 

in providing American homes and businesses with reliable homegrown and low-cost energy. 

Thank you for inviting me, and I look forward to answering your 

questions. 

[The prepared statement of Mr. Gramlich follows:] 

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Mr. WHITFIELD. Thank you. 

Dr. Lesser, you are recognized for 5 minutes. 

STATEMENT OF JONATHAN LESSER 

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

Rush, members of the subcommittee. My name is Jonathan Lesser. 

I am the president of Continental Economics. I began my professional career almost 30 years ago as a load forecaster for Idaho 

Power. Over the years, in my work for government, industry, and 

as a consultant, I have been involved with and researched many 

facets of the energy industry as well as corresponding policy issues 

at both the national and individual state levels. 

I appreciate your invitation to be here today to discuss the reliability challenges confronting us as we seek to integrate intermittent resources onto the grid. I am appearing today on my own behalf, and the views expressed in my testimony today are mine and 

mine alone. 

Integration costs can be broken down into two categories. The 

first category includes the cost of ensuring the power system is operated safely and reliably from moment to moment. 

The second category includes the cost of connecting resources to 

the power grid, called interconnection cost, specifically building 

new transmission lines and substations to deliver electricity from 

individual generating units to load centers like D.C. 

To operate a power system, the supply of electricity must continuously match demand. If power supply exceeds demand at any 

time, it can overload the system. If demand exceeds supply, you 

can have brownouts or even rolling blackouts. Because the overall 

demand for electricity changes moment to moment, power system 

operators must continually adjust electric supplies. 

In addition, as has been mentioned, grid operators have to plan 

for contingencies. On those hot sultry August days here in Washington, D.C., the demand for electricity peaks because of air conditioning, so power system operators have to ensure there is sufficient resources to meet those loads. 

Gas generators provide the most quick reserve capacity because 

they can be started, stopped or ramped up and down fairly easily 

and quickly. In contrast, coal and nuclear plants are designed to 

run around the clock, generating the same amount of power all 

times. Starting a nuclear plant, for example, can actually take several days. Although the output of these plants can be varied up and 

down, doing so increases the wear and tear on them, which increases their operating costs and reduces their fuel efficiency. 

It is not surprising that intermittent resources, like wind and 

solar, cannot provide these sorts of operating reserves. In fact, 

intermittent resources actually increase the need for reserves. The 

reason for this is that system operators must also cope with the 

wide swings and output from intermittent resources. That, in a 

nutshell, is what integrating intermittent generating resources is 

all about and why it is both challenging and costly. 

Chicago’s experience during last July’s heat wave provides a compelling example. During that heat wave, Illinois wind power generated less than 5 percent of its capacity during the record breaking heat, producing only an average of 120 megawatts of power 

87 

from over 2,700 megawatts of installed wind. On July 6, 2012, 

when the demand for electricity in northern Illinois and Chicago 

hit a record of over 22,000 megawatts, the average amount of wind 

generation that day was a virtually non-existent 4 megawatts. The 

potential loss of thousands of megawatts of intermittent generation 

for a short time, which has occurred in the past, means that system operators must increase the quantity of available reserve capacity. That increases cost. It is as if thousands of vehicles have 

their engines idling, waiting to run on the possibility they are 

needed. 

One such study, for example, by the American Tradition Institute, found reliability related transmission losses and costs for 

Texas alone are over $1 billion per year. 

In regions with wholesale electric markets, system operators use 

next day forecasts of availability and demand to determine how 

they will operate the power system. Although even wind advocates 

acknowledge wind’s inherent intermittency, they claim wind generation can be predicted accurately several days in advance, allowing system operators to reduce, if not eliminate, the impacts of 

wind’s volatility. Forecasts and operational data, including—in 

areas including Texas as well as in European countries, show that 

is not the case. 

The other thing about that that is causing this problem to be severe is that subsidies, such as the PTC and renewable portfolio 

standards, plus the socialization of most integration costs, have increased reliability concerns. As Commissioner Donna Nelson of the 

Texas Public Utility Commission stated last year, the market distortions caused by renewable energy incentives are one of the primary causes, I believe, of our current resource adequacy issues. 

This distortion makes it difficult for other generation types to recover their cost and discourages investment in new generation, and 

I will leave it at that. 

Thank you very much. I look forward to your questions. 

[The prepared statement of Mr. Lesser follows:] 

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Mr. WHITFIELD. Thank you very much, Dr. Lesser. 

And thank all of you for your testimony. 

At this time, we will begin the questions, and I will recognize 

myself for 5 minutes of questions. 

In your testimony, Dr. Lesser, you had a paragraph or so, and 

basically in which you said that increasing use of intermittent generating resources does create obstacles to reliability or at least it 

exacerbates reliability, and it increases integration cost to the consumers. Would you elaborate on that a little bit for me? 

Mr. LESSER. Sure. The problem with integrating intermittent resources, like wind and solar, is that you have to, in addition to 

planning for the ups and downs of demand all the time, you have 

to have additional reserve capacity in case the wind stops blowing 

suddenly, and that has happened. Well, that means you have to 

have additional costs incurred for other reserve capacity. As a result, that increases cost. 

Because wind is subsidized, you get more of it, you get greater 

investment in wind power. That is why you have a subsidy. That 

tends to increase the amount of wind capacity that exacerbates the 

reliability issues that grid operators have to deal with. Plus when 

you socialize transmission costs, such as building new transmission 

lines in Texas, which is now up to a cost of over $7 billion, that 

again, you are incenting that sort of investment, which raises costs 

for everyone and creates more reliability problems. 

It is true that, you know, the grid operators can handle wind reliability at this point. I mean, the lights are on in here, that is 

true, but as you increase, though, that, the amount of wind penetration on the system, those costs will keep increasing, and it will 

become more difficult to maintain a reliable power system. 

Mr. WHITFIELD. Now, you know, the production tax credit was 

recently extended for the wind industry, and we hear a lot about 

negative pricing or selling electricity generation at less than your 

cost. There is quite a bit of that going on in the wind industry. 

Would you elaborate on that? 

Mr. LESSER. Yes, Mr. Chairman. Negative pricing sounds great. 

It actually happens—and it sounds very strange because why 

would anyone, why would the market price for any good ever be 

negative? You know, why would someone want to pay you to buy 

what they are selling? But because of the production tax credit is negative 23—is $23 per megawatt, that translates on a before tax basis of $35 per 

megawatt. Well, so wind power producers get in at production tax 

credit, have an incentive to bid in their generation into the market 

as long as the price is greater than negative $35. And because 

other power producers, like nuclear and coal plants, which are designed to run round the clock, they keep their system operating. 

They can’t just shut the plants down. So you end up with excess 

supply in certain times of the year and you end up with negative 

prices. That the hours of negative pricing during the year is actually increasing. 

What you have now is when those prices are negative, so those 

coal nuclear operators are actually having to pay the grid to keep 

operating. That obviously increases their cost, reduces their profitability; they are having to shut down. 

116 

In Minnesota, for example, I believe they announced the closure 

of one coal plant because of subsidized wind. Therefore, what happens is, you start shutting down those plants that are needed for 

reliability because of wind, subsidized wind generation, well, you 

still have to maintain reliability, so you have to have more reserve 

capacity, which again, increases cost. 

Mr. WHITFIELD. All of us, I think, recognize that the Clean Air 

Act has been a good piece of legislation, and as the gentleman from 

California said, our CO2 emissions are the lowest they have been 

in 20 years. 

Are any of you familiar with EPA providing an exemption to a 

fuel source for the purposes of being a backup, as you mentioned 

in your demand response paragraph, Mr. Shelk, where EPA has 

now exempted diesel fuel engines from the Clean Air Act? 

Mr. SHELK. That is correct, Mr. Chairman. 

In a rule, a final rule in January called RICE NESHAPS, which 

it stands for Reciprocal Internal Combustion Engines, and this is 

the important part, this is for the Hazardous Air Pollutant Standards, and this is an interesting issue because it unites in the litigation pending in the D.C. Circuit and before EPA power generators, 

power health groups, environmental organizations, states, everyone 

but the demand response community oppose this, and EPA decided 

that these backup engines should be exempt, these diesel engines. 

Now, to their credit, they did require ultralow sulfur diesel, but 

the problem is we went to EPA and said, look, you have to understand how this rule overlays with electric power markets. And this 

is sort of the classic case in government that we have all encountered of sort of stovepipe thinking where, when FERC acted to pay 

demand response, as I indicated, in 2011, we raised these environmental concerns about the backup generators. We said they should 

be excluded because the owner of the engine is not actually reducing demand. It is just taking less power from the grid, but they are 

turning on those uncontrolled diesel generators at the industrial facility, and FERC said, go talk to EPA. We raised this concern at 

EPA, and in the final rule, you will see EPA said, well, certain parties, meaning us and many others, raised this and you should go 

back to FERC. 

So, it is sort of the two agencies really are talking to each other, 

and we are very concerned about this for the reasons that I have 

outlined and you mentioned, and again, this unites all of us, 

whether you are for coal or nuclear, natural gas, renewables; what 

is happening now is these small power plants, these backup diesel 

generators, can be linked together in the market. They can bid into 

the capacity market and the energy market where we get our revenue, regardless of what fuel source you prefer, and they are backing out those cleaner forms of generation, and we are hopeful EPA 

will reconsider the rule or the court will intervene. 

Mr. WHITFIELD. Thank you. My time has expired. 

I recognize Mr. Rush for 5 minutes. 

Mr. RUSH. Again, thank you, Mr. Chairman. 

Mr. Gramlich, you seem to be sitting there wanting to respond 

to some of the statements of Dr. Lesser. Do you have any response 

regarding the performance of the wind industry in my windy city 

of Chicago? 

117 

Mr. GRAMLICH. Yes. Thank you. 

I mean, I didn’t hear anything from Dr. Lesser that contradicted 

the statements I made about many parts of the country being able 

to reliably integrate vastly greater amounts of wind energy than 

we already have on the system. 

We were just in our annual conference in Chicago with about 

10,000 people, and Governor Branstad from Iowa came there and 

spoke, and he was raving about the 20 percent of their electricity 

that comes from wind. And I just saw also this week he announced 

that they are bringing 1,000 more megawatts. And I don’t think he 

or MidAmerican Energy want an unreliable power grid; in fact, I 

think they want to further diversify their electricity portfolio. 

When we were all here last and I testified before this same subcommittee, we were talking about the value of a diverse portfolio. 

And I am not saying we should do 100 percent wind on the grid, 

I am saying, as we all said then, every panelist said, yes, we need 

a more diverse portfolio. Wind would be just one part, but an important part, of that diverse portfolio. It will keep the lights on. 

And the costs, I don’t disagree that there can be some incremental 

costs with integrating any resource, but you have to say, as compared to what? If you increase more wind on the grid, you may 

have, as I indicated, a very modest cost. If you put more large conventional plants on the grid, you also have an incremental cost. 

Mr. RUSH. Thank you so much. 

Mr. Sypolt, in your written testimony you mentioned that there 

are concerns in the Midwest Independent System Operator, MISO, 

region regarding the number of coal-fire-powered generators that 

would need to be retired and replaced with natural gas generators. 

You cited the testimony of MISO’s executive vice president, Clair 

Moeller, from her March 19th, 2013, testimony before the subcommittee that MISO estimated that about 11.5 gigawatts of coalfired generation may need to be replaced to comply with the environmental regulations, and that MISO was currently identifying 

potential impediments to integrating that amount of gas-fired generation in order to plan accordingly. 

Are you aware of what some of those barriers might be? Do you 

have any concerns regarding the natural gas pipeline industry’s 

ability to build the capacity or infrastructure that is needed in 

order to keep pace with the market demand in the MISO region or 

any other region? 

Mr. SYPOLT. Thank you for the question, Congressman. And, you 

know, as I said earlier, the concerns that INGAA has are regionally 

targeted. MISO is one where a study had been done that said there 

are conversions that are going to occur from coal to most likely natural gas. Is there adequate pipeline capacity available? 

INGAA is very confident that the pipeline industry is up to being 

able to build that pipeline capacity needed to meet the additional 

demand on the pipelines there. What is required, though, is that 

generators actually sign up for some firm transportation to make 

sure that capacity is built. I am not saying that every generating 

plant built has to have firm transportation, but I am saying there 

needs to be a review, which MISO actually did, that said, you 

know, there are situations where there may not be adequate pipeline capacity, and the only way that pipeline capacity would be 

118 

built is if there are some long-term contracts signed that allows 

those pipeline builds to be economically built. 

Mr. RUSH. Mr. Cicio, do you have any responses? 

Mr. CICIO. I think that the—I would agree that we have a very 

good regulatory approach in how pipelines are built. 

What we are concerned about, as I previously expressed, is that 

there is no entity that is overseeing this ‘‘pipeline capacity at peak 

demand concern.’’ There is in the electric side of the market, there 

is the North American Electric Reliability Corporation that is evaluating the Nation for electric reliability. We are raising the question for a conversation that, you know, there is this absence of 

oversight in determining whether or not there is capacity problems 

in the natural gas pipeline, and so that is a concern. 

Mr. WHITFIELD. At this time—— 

Mr. RUSH. Yield back. 

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

Texas Mr. Hall for 5 minutes. 

Mr. HALL. I thank you, Mr. Chairman. 

And, Dr. Lesser, I notice in your testimony you mentioned the 

myth of green jobs, and I sure agree with you that there is a lot 

of myth involved there. And I guess the question is whether or not 

subsidies for renewables really are creating sustainable job and 

economic growth. 

The meeting today is about examining the challenges and the 

consumer impacts resulting from the increased use of natural gas 

and renewables. And I think sometime I would like to see us have 

a hearing here on really what fossil fuels do for us. And 2013 is 

not completed yet, but in 2012 indicates that from coal we get 37 

percent of the preliminary U.S. electric generation and about 30 

percent from natural gas. Those are hard, cold facts that we can’t 

fight. 

And Mr. Waxman is a wonderful member of this committee, and 

I have sat here with him for 30-something years. He continues to 

warn us, and in closing, about the threat of global warming will always be with us. And of course it will as long as he keeps putting 

in the Congressional Record and they keep talking about it. But 

without fossil fuels, we would all have to work our way or feel our 

way out of this building right today, and go to a car that wouldn’t 

start, and get to a home that would be cold in the winter and too 

hot in the summertime. So we ought to have a hearing sometime 

on what fossil fuels are really still doing for us, but that is not 

what we are here for today. 

We need fossil fuels, and we need to depend on it, and certainly 

I would ask you that. There is a lot of discussion on renewables. 

And do you see this as a realistic expectation? If not, why not? 

Dr. Lesser. 

Mr. LESSER. Well, thank you, Representative Hall. 

Mr. HALL. Now, you almost answered in your—you almost answered it for me a moment ago, but go ahead and expand on that 

a little for us. 

Mr. LESSER. Thank you, sir. 

In my own view, you will see lots of studies that will show that, 

say, building more wind capacity, renewable generation subsidies 

will increase economic growth. Well, that is true, they will increase 

119 

economic growth as long as the subsidies are continued, which is 

why they want to continue subsidies. The problem is those studies 

never look at the other side of the ledger, which is who is paying 

for it? They assume that the money just falls from the sky. 

You simply cannot subsidize your way to long-term, sustained 

economic growth. That is economic free-lunchism. It does not work. 

It would be nice if it worked. We would all be a lot happier. We 

would have a much better economy in the country. 

Europe has found this out. In Spain, Germany, Denmark, they 

are cutting back on their subsidies of renewable power because it 

simply doesn’t work. They cannot afford it. 

In terms of the sort of—I think you mentioned some of the global 

climate change and emissions, there is a small impact on emissions 

because of renewables, but it is very small, because you have to operate the remaining parts of the power grid more inefficiently by 

cycling conventional plants up and down. It is like the difference 

between driving your car in the city, where you are in stop-and-go 

driving, versus driving at a constant speed on the highway. It is 

less efficient; therefore, there are more emissions. 

So the real—to the extent climate change is a significant issue, 

and you want to reduce carbon emission, then the question is what 

is the most efficient, what is the cheapest way of reducing those 

emissions? And I would suggest to you that subsidizing renewables 

is not the way. It is by far a very expensive way of reducing climate 

emissions, and there are much cheaper ways to do so. 

Mr. HALL. And should Congress, then, permit recipients of subsidies, like the PTC, to bid negative prices in power markets? 

Mr. LESSER. No, sir. In my view, all subsidies should be removed, 

not only subsidies for renewable resources, but also subsidies for 

conventional resources. You should have a level playing field in 

which all resources can compete. 

It is funny, though, in this week’s AWEA meetings that Mr. 

Gramlich referenced, AWEA is now advocating what are called 

master limited partnerships for wind developers. So not only will 

they get the PTC and a tax credit worth $35 per megawatt hour 

on a pretax basis, but you would have a corporate structure that 

doesn’t pay income taxes. That is a really good deal. You get a tax 

credit, and you don’t have to pay income taxes. I would like to have 

that for my business. 

Mr. WHITFIELD. The gentleman’s time has expired. 

Mr. HALL. And I thank the chair. 

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

California Mr. Waxman for 5 minutes. 

Mr. WAXMAN. Thank you, Mr. Chairman. 

I assume, Dr. Lesser, those same mechanisms are available to 

fossil fuel enterprises, aren’t they? 

Mr. LESSER. No, they are not, sir. 

Mr. WAXMAN. They are not. 

Mr. LESSER. For gas pipelines, you have—— 

Mr. WAXMAN. Well, I think you are wrong. 

Mr. LESSER. You would—— 

Mr. WAXMAN. I think you are wrong, and we could look at it very 

carefully. The REIT and the other tax reductions for fossil fuels are 

available. 

120 

Over the past 4 years, we have doubled our capacity to generate 

renewable electricity from wind and solar resources. Five percent 

of our electricity now comes from renewable sources other than hydropower. State and Federal renewable energy policies are playing 

an important role in driving this transition. The cost of renewable 

energy is also rapidly declining, and, therefore, wind power is already cost-competitive with fossil-fuel generation in some parts of 

the country. 

We have made progress, but we need to do much more to reduce 

our carbon pollution and move towards a clean-energy economy. 

Low-carbon, low-cost renewable electricity should appeal to all 

members of this subcommittee, but instead of embracing this technology, some are attacking it. 

Mr. Gramlich, we have heard testimony today that wind costs too 

much and impairs the reliability of the electric grid, so I am going 

to ask you some questions about these claims. 

Does wind generation require large amounts of expensive backup 

fossil generation, and how much does the necessary backup power 

cost consumers? 

Mr. GRAMLICH. Thank you. 

No, it does not require large amounts of backup generation. All 

electricity sources rely on system backup from all other resources. 

And the costs of the wind reserves that are needed are about 6 

cents out of a typical household’s $140 monthly electric bill as compared to those costs for other conventional resources that are much 

higher. 

Mr. WAXMAN. How do the costs of backup generation for wind 

compare to the costs of backup generation for conventional power 

plants? 

Mr. GRAMLICH. The costs for conventional power is, at least in 

one study cited in my testimony, about 40 times higher, about 

$2.50 per monthly bill compared to the 6 cents that I stated a 

minute ago. 

Mr. WAXMAN. The backup generation for wind is much cheaper, 

because variations in wind are slow and predictable, while a nuclear fossil-fired power plant can go offline instantly; is that correct? 

Mr. GRAMLICH. That is correct. 

Mr. WAXMAN. We have heard claims that wind is unpredictable 

and can suddenly stop blowing, adversely affecting electric reliability. Is that accurate? 

Mr. GRAMLICH. No. Wind energy can be forecasted now with sufficient accuracy so grid operators can operate reliably and handle 

the fluctuations in a very low-cost manner. 

Mr. WAXMAN. Mr. Weiss? 

Mr. WEISS. Yes, Mr. Waxman. The North American Reliability 

Corporation looked at some of the kinds of claims that Dr. Lesser 

made and found them wanting. In their State of Reliability report 

of 2013, and I am going to read from the report, and I quote, 

‘‘There were no significant reliability challenges reported in the 

2012 summer periods resulting from the integration of variable 

generation resources.’’ 

Mr. WAXMAN. Thank you. I want to put that whole statement in 

the record. 

121 

Mr. WEISS. OK. Thank you. 

Mr. WAXMAN. Let me ask about the production tax credit. Some 

argue that the cost of wind is so low, that the tax credit allows 

wind to bid negative prices into the market, and they say that 

these negative bids are undermining the profitability of other generation sources. 

How often does this negative pricing occur, Mr. Gramlich, and 

how often is it affecting the market price for electricity? 

Mr. GRAMLICH. It is extremely rare; far less than 1 percent of the 

time. Moreover, the occurrences have dropped by 60 percent in 

Texas, which is the area where this has been alleged, and they will 

be virtually gone as soon as transmission lines are put in place into 

these few localized areas in the country. 

Moreover, it doesn’t harm consumers. Low prices are a good 

thing. And the market price that is actually received by—if some 

were concerned with, say, fossil and nuclear plants, they are actually not receiving, those plants. It is almost never actually received 

by them. 

Mr. WAXMAN. What about the price for consumers? Does wind 

generation increase utility bills or save consumers money? I gather 

your last statement was that it saves consumers money. 

Mr. GRAMLICH. Right. It is saving consumers money. 

Mr. WAXMAN. That is a good thing unless you want consumers 

to pay more money so they can continue to use coal even when natural gas would be cheaper, and even when wind may be cheaper. 

Mr. Weiss or Mr. Gramlich, do you understand whether the 

REITs mechanisms and other tax mechanisms are available to fossil fuel industries, as they may well become available for renewable 

energy? 

Mr. WEISS. As I understand it, Mr. Waxman, the master limited 

partnership is available and being employed now by oil companies. 

Mr. WAXMAN. So it is a good way to raise money? 

Mr. WEISS. Yes, it is. 

Mr. WAXMAN. And raising money for enterprise, as I understand 

it, is supposed to be a good thing, investment by entrepreneurs to 

advance good business. 

Mr. WEISS. And overall the Nuclear Energy Institute looked at 

subsidies overall over the last 60 years and found 70 percent go to 

fossil fuels, 10 percent have gone to renewables. 

Mr. WHITFIELD. The gentleman’s time has expired. And without 

objection, the document that Mr. Weiss referred to will be entered 

into the record. 

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

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

Kansas Mr. Pompeo for 5 minutes. 

Mr. POMPEO. Great. Thank you, Mr. Chairman. 

You know, Ranking Member Waxman this morning said that 

some on our side are confused. He wasn’t sure whether we liked 

cheap natural gas or not. Not confused. I like cheap natural gas, 

like cheap coal. Frankly, I like cheap energy. I like consumers to 

have affordable energy. There should be no confusion about that. 

Mr. Sypolt, I want to talk to you about pipelines. Today I actually introduced a piece of legislation that will for the first time tell 

FERC, you have a deadline; you got to get your homework in on 

122 

time. It will give every agency that has got a role in approving 

pipeline permits the chance to do their work and to decide whether 

or they like it or not. There is no requirement that they approve 

the pipeline, but it says you can’t sit on it. You can’t hang onto it 

forever. Gives them 12 months. There is an opportunity for an extension. We have got bipartisan support for that. It is being introduced by a lot of members of this committee: Mr. Matheson, Mr. 

Olson, Mr. Gardner, Mr. Johnson. 

You know, we saw $30 gas at the Boston citygates in the Northeast not too long ago, and I just wanted to get your view of whether 

creating certainty for folks who are investing in pipelines and want 

to build these out will help our electric grid reliability. 

Mr. SYPOLT. Thank you for the question, Mr. Congressman. And 

INGAA certainly supports your bill. We believe that anything that 

provides certainty and actually moves the process along more 

quickly so the pipelines can be built in the areas where they are 

needed can actually help reduce the cost of energy getting delivered 

into those areas. 

I think FERC does a very good job today with their process, but 

they don’t have all the authority they actually need to cause all the 

permits to be issued in a timely fashion. And the deadline that you 

proposed by your bill, we think, would be very helpful in assuring 

that pipelines are built in a timely fashion. 

Mr. POMPEO. Mr. Shelk, in your written testimony, you talked 

about, so we have got this shale gas revolution, it is exciting. If the 

Federal Government doesn’t mess it up, it will be very important 

to American manufacturing. It will be great for grid reliability as 

well. But you talked about being overconfident about anything in 

terms of the future. It wasn’t that long ago that we thought we 

were out of natural gas as well. 

Give me a sense of what you think the grid reliability implications are for that risk and how we as Federal policymakers ought 

to respond to the things that we might well not foresee. 

Mr. SHELK. Thanks for the question. 

I followed the hearing earlier this week and also an interview 

just this week from the former chair of the subcommittee, Phil 

Sharp from Indiana, who is now the president of Resources for the 

Future. And it was a long time ago, I think you go back to when 

I was here in the 1980s and 1990s, assumptions were made then, 

for example, that we were going to have to have a surcharge on 

every consumer to bring a very expensive pipeline down from Alaska. We had the Synthetic Fuels Corporation. I mean, you can kind 

of—the list goes on. 

I think it was reassuring to hear the bipartisan testimony Tuesday that we are going to have game changers, that we couldn’t predict then. But I think this committee, for example—we wouldn’t 

have the natural gas revolution, the shale gas phenomenon, as I 

said in my written statement, unless this committee, again, coming 

together in the late 1980s saying, you know what, we made a mistake in the 1970s by thinking we could micromanage this with 

command-and-control regulation. And everybody on the committee, 

after some contention, to be sure, came together and removed the 

wellhead price controls, restructured the pipeline industry, reVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00128 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
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moved the Fuel Use Act that said no natural gas could be used in 

power generation. 

So my advice would be I think you set up the right mechanism. 

At FERC they are very vigilant about this. I would respectfully disagree with Mr. Cicio. There may not be something called the natural gas reliability entity, but you all in this committee created 

electric reliability organization in the form of NERC. NERC is looking at this. DOE is looking at this. 

The bottom line is I think what we have seen is we can’t predict 

what is going to happen, and therefore, the most flexible, adaptable 

system you can have is what works best. And I think market forces 

ultimately, within the confines of smart regulation, are good. What 

doesn’t work is trying to micromanage today and say what the fuel 

mix should be and what percentages tomorrow. 

Mr. POMPEO. So things like State RPSs which say ‘‘thou shalt’’ 

would be bad policy for any energy source? 

Mr. SHELK. Well, now you are going to get me in trouble. Mr. 

Hall is not here, but Mr. Hall famously said when I was here decades ago that my friends are for the bill, and my friends were 

against the bill, and I am going to vote with my friends. 

Mr. POMPEO. But, I mean, I think if you are—— 

Mr. SHELK. And in my business, if I have members behind me 

that are on one side and members on the other, I am going to support my members. 

But to be serious, what we focus on, I think this is important, 

what Mr. Waxman was saying, under the Federal Power Act that 

this committee adopted in 1935, these are state-level decisions. And 

we may or may not agree with them, but what we focus on and 

what our members focus on is if a state wants to go down that 

road, number one, use competitive procurement so everybody competes to serve the business at the least cost to consumers. Number 

two, you have to have market rules to compensate the gas plants 

adequately, which is not happening today. States are behind. As 

the RPS standards, whether you like them or not, increase, as they 

will in the next 5 to 10 years, the states aren’t adequately paying 

for the backup generation that exists. 

Mr. POMPEO. Yes. 

Mr. SHELK. So that is what we focus on. And you have got to get 

the market rules to match up with the RPS standards, and that 

often doesn’t happen. 

Mr. POMPEO. I appreciate that. 

My time is up, but there are national implications to the State 

rules as well. 

Mr. SHELK. Yep. 

Mr. POMPEO. It affects the national grid and imposes costs on 

States that are not the State that put the law in place. 

Thanks, Mr. Chairman. 

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

Texas Mr. Green for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank our panel for being here. 

The disconnect between incentives created by wholesale power 

market rules and the need for commitments that ensure the availVerDate Nov 24 2008 15:18 Oct 24, 2013 Jkt 037690 PO 00000 Frm 00129 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-40 CHRIS
124 

ability of pipeline capacity has been widely noted. What can Congress do to help this problem? 

Now, I admit one of the worst decisions Congress ever made was 

back in the 1970s saying we can’t use natural gas. Of course, back 

then natural gas was a very precious resource, and even 8 years 

ago it was $12, $13 in MCF. But Congress does overreact like they 

did in the 1970s. What can we do to help that certainty? 

Mr. SHELK. A couple of thoughts there. One is, as the INGAA 

witness mentioned, and we would agree, there are wholesale market rules that need to be addressed. Where we disagree is you can’t 

simply surgically say, well, if a gas-fired generator enters into a 20- 

year contract for firm gas transportation, we are just going to pass 

that along to consumers, because that could be a considerable expense. 

So what happens is under the watch of FERC, the regions work 

on this, and they are doing that now. They are looking at those 

issues. So I think by holding the hearings you held last month, by 

continuing to hold hearings and do oversight of FERC that oversees 

the wholesale market, that is, I think, what Congress can do. There 

is really no need for additional legislation. 

But what also needs to happen, and maybe there is a congressional role here, I am not sure, is it is not just the wholesale market, it is the retail market. And the retail market is under the jurisdiction of the states. And I will give you a specific example. 

If we were to have gas-fired generators in New England enter 

into long-term contracts for gas transportation, one, it is not necessary most of the time. But put that aside, there are states in the 

region, Connecticut in particular, that has a bill moving through 

the legislature very rapidly as we are meeting today that would 

hot-wire a pipeline and a long-term contract for Canadian hydro 

from Quebec from a crown corporation in Canada that is opposed 

by the Governor of New Hampshire, it is opposed by Massachusetts, but if it is passed by Connecticut, it will artificially suppress 

the market price and make it very difficult for anybody to arrange 

for long-term gas transportation. So I think Congress can maybe 

help shed some light on that, but ultimately it is the jurisdiction 

over FERC. 

Mr. GREEN. Well, I have to admit all my life I have heard about 

the Austin-to-Boston connection for natural gas, and I have always 

wondered why they still burned coal oil. 

But anyway, Mr. Sypolt, my next question is I want to talk about 

the reliability of the natural gas pipelines. Do you or Dominion 

have many outages in what is key to the reliability in the pipeline 

sector, and what is the fundamental changes in your market area 

that is causing you to change your pipeline operations? 

Mr. SYPOLT. Thank you for the question, Mr. Congressman. I 

would tell you that the pipeline, natural gas interstate pipeline, 

grid has been extremely reliable to serve those customers who have 

signed up for primary firm transportation. The pipeline system was 

designed around those contracts, and as there is growth in given 

markets, and there is the market signal from the market by way 

of a long-term contract that says they need additional capacity, 

that capacity is built, and those markets are served extremely reliably. 

125 

You asked about Dominion’s experience with reliability. You 

know, we did go back and look at this for our primary firm contracts over a period of time, and our reliability has been absolutely 

phenomenal. We went back the last 3 years and had zero interruptions with regard to primary firm transportation. And I know there 

was one run we went 7 years where we had no impact on any primary firm contract. So the pipeline grid is extremely reliable for 

those who pay for that service. 

Many times there are folks who refer to reliability as—a pipeline 

as not being reliable are really looking at interruptible-type transportation contracts, and you can’t talk about that as reliability. The 

pipeline system was not designed to meet those on a reliable basis. 

That is actually transportation capacity issues by markets that are 

paying for it that are not using it at any given time, and when 

those markets who are paying for that under primary firm actually 

need it, that is when it is pulled back. 

And that has really been much of the concern that INGAA has 

really talked about as you go forward, and more and more transportation is needed by growing markets. Whether that is power 

generation or industrial load or growing liquid distribution load, 

what it really says is there is going to be more and more demand 

on the pipeline system, and really counting on capacity that is not 

used by the current market that pays for that under primary firm 

is the real risk. 

Mr. GREEN. Thank you, Mr. Chairman. I know I am almost out 

of time, but I have a couple of other questions on cogen, and I 

would like to submit it to the panel. 

We went through that battle in the legislature in the 1980s, and 

at that time my friends were on both sides, and I was with my 

friends. But it worked out in Texas somehow that—and cogen— 

during cap and trade, I wanted cogeneration to be considered one 

of our energy savings, because it is such a benefit not only to the 

customers, but the industry. 

But again, thank you, Mr. Chairman, for the hearing. 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time I recognize the gentleman from Virginia Mr. Griffith 

for 5 minutes. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I appreciate it very 

much that you are having this hearing. 

And also appreciate my friends from Dominion being here today. 

I know, Mr. Sypolt, that you are the gas guy, but do appreciate the 

fact that Dominion Energy has not abandoned coal, particularly 

central Appalachian coal, and was there at the ribbon cutting at 

the cleanest coal-burning plant that was opened up officially last 

September, and very proud of that facility. Unfortunately, of 

course, under new EPA regulations that have been proposed, that 

facility wouldn’t be allowed to be constructed today, but we are awfully proud to have you all there in the Ninth District of Virginia 

creating jobs and bolstering our economy. 

Does it make you nervous, though, and have to ask, when you 

think back on quotes from the President that indicate that he 

might not be so hot on natural gas? Of course, it seems that a lot 

of folks who were not for natural gas a few years ago are now for 

it because it seems to be the answer to a lot of problems. But I 

126 

would have to think it would make you nervous, and I want to ask 

you that, when you remember that quote from the President in 

January of 2008 when he said, quote, When I was asked earlier 

about the issue of coal, you know, under my plan of a cap-andtrade system, electricity rates would necessarily skyrocket, even regardless of what I say about whether coal is good or bad, because 

I am capping greenhouse gases. Coal power plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That 

will cost money. They will pass that money on to the consumers. 

Does that statement still make you nervous? 

Mr. SYPOLT. Well, what I would say is, you know, Dominion certainly supports all forms of energy. And coal—you know, we have 

nuclear, we have coal, we have natural gas-driven power plants, we 

have wind generation, as well as building some solar and looking 

at some offshore wind as well, and have some hydro. So we certainly support all forms of energy, and we think our country needs 

all forms of energy. 

Mr. GRIFFITH. And your company has always been diversified, 

and that has always been one of your market success stories is that 

you haven’t put all your eggs in one basket. Nor should the United 

States of America put all of its eggs into one basket at any time, 

and we probably shouldn’t eliminate that great black egg of coal 

from the basket of energy sources for the United States. 

Let me move on to another question, if I might. Mr. Cicio, I 

would have to say to you, we have heard a lot of testimony about 

natural gas being cheap, but we heard testimony earlier this year 

that when natural gas hits that $4 mark, that coal once again becomes very, very competitive. And, of course, when you are trying 

to have that system that is secure, you want to have a diversity. 

And isn’t it true that natural gas is expected to hit $4 by the end 

of the year? And I think in March it was already at $3.81, so that 

coal is once again very competitive if you are just looking at costs? 

And what we are really facing here are regulations that are hurting coal, not marketplace competitiveness. 

Mr. CICIO. Well, that is right. It is critically important that 

coal—it is critically important for industrial competitiveness where 

small amounts of changes in the price of electricity makes a great 

deal. Coal needs to be in the mix. And $4 of gas bumps into very 

competitive coal prices. 

Mr. GRIFFITH. And we are just about there, and probably—— 

Mr. CICIO. Yes. 

Mr. GRIFFITH [continuing]. We will be in that neighborhood for 

some time. 

Mr. CICIO. Yes. 

Mr. GRIFFITH. Thank you very much. 

Dr. Lesser, am I to understand that your concerns are that in 

other places in the world where they have relied on intermittent 

sources, and we heard that Germany was doing a good job of moving in that direction, but isn’t it, in fact, the case that Germany is 

having some significant problems with their intermittent sources, 

and that it is actually affecting industry there because they can’t 

count on the reliability? 

127 

And I am looking at an article from the Institute for Energy Research of January this year where they say, To illustrate the problem that renewable energy instability can cause, here is an example: electric grid weakened for just a millisecond at 3 a.m. The machines at Hydro Aluminum in Hamburg ground to a halt. Production stopped, and the aluminum belts snagged, hitting machines 

and destroying a piece of the mill with damages amounting to 

$12,300 to equipment. The voltage weakened two more times in the 

next 3 weeks, causing the company to purchase its own emergency 

system using batteries costing $185,000. 

Are those the kind of stories that cause you concern? Do you 

have similar stories that you have heard? 

Mr. LESSER. Those are certainly part of the issues that are of 

concern. For me, I think other issues are the, say—and especially 

in Europe, the cost of electricity is extremely high, which reduces 

economic growth. That is why they are cutting back on all their 

subsidies. 

So my concern is here we are going down that same path, that 

we are making it much more difficult to maintain reliability. I 

know that ERCOT, the grid operator in Texas, is quite concerned 

about potential rolling blackouts this summer because of very high 

demand. They have so much wind. Wind tends not to blow when 

the power is most needed. That is just the way it is that I have 

discovered in my own research. So those are significant problems, 

yes. 

Mr. GRIFFITH. And that can affect jobs; can it not? 

Mr. LESSER. Absolutely. 

Mr. WHITFIELD. The gentleman’s times has expired. 

Mr. GRIFFITH. Thank you, Mr. Chairman. I yield back. 

Mr. WHITFIELD. At this time I recognize the gentlelady from 

California Mrs. Capps for 5 minutes. 

Mrs. CAPPS. Thank you, Mr. Chairman. 

And thank you to our witnesses, each of you, for your testimony. 

You know, we all know that America’s power is generated by 

many different sources, to be sure, but we also know that fossil 

fuels make up the overwhelming majority of our Nation’s energy 

supply. Today is the third subcommittee hearing held this year on 

the sources of fuel used for electricity generation in the United 

States, but we have yet to hold a hearing examining the consequences of our dependence on fossil fuels. This is more than an 

odd note, considering that we are already seeing the very real impacts from this dependence on fossil fuels: rising sea levels, severe 

droughts, extreme weather, and superstorms. Climate change is 

very real and is already causing serious problems that demand action. In addition to obvious environmental damage, these storms, 

droughts and wildfires are having a significant economic impact. 

And, Mr. Weiss, could you share with us briefly—I want to ask 

you a couple more questions, too—some of the documented research 

of how climate change is affecting our economy? 

Mr. WEISS. Thank you, Representative Capps. Yes. We analyzed the $25 billion in damages extreme weather 

events over the past 2 years, including the drought in Texas and 

the Southwest, and found that the total economic damages were 

$188 billion. In addition, the federal government spent $136 billion 

128 

on disaster relief and recovery over those same periods, which is 

about $400 per household per year for disaster relief and recovery. 

Mrs. CAPPS. Thank you. 

In your testimony today, you stated, and it is a quote, Because 

the Federal Government pays for a major share of disaster recovery, investing in resiliency now will help protect taxpayers from 

more deficit spending in the future. 

This is actually rather counter to what we often hear about the 

value of investing in our country. Could you elaborate on this just 

briefly? How can predisaster mitigation spending actually save taxpayers money in the long run? 

Mr. WEISS. Well, the Federal Emergency Management Agency 

found that by investing $1 in disaster resilience, or what they call 

predisaster mitigation, that reduces damages by $4. And so, for example, your efforts to get more investments in disaster resilience 

will help save us money in the long run by a ratio of about 4 to 

1, according to FEMA. 

Mrs. CAPPS. Thank you. 

One more question, if I—yes, I have time. 

Especially in these tough fiscal times, we certainly need to be allocating tax dollars more effectively at all levels of government. 

Many States and localities understand the long-term benefits you 

have discussed and are eager to implement mitigation projects. The 

problem is, however, they can’t afford it. 

I believe the broad public benefit in cost savings alone create a 

compelling national interest for the Federal Government to help 

our local communities plan and implement predisaster mitigation 

efforts, and that is why I sent a letter to the President earlier this 

year with 39 of my colleagues, including several members on this 

committee, urging him to take action on this issue. And I was 

pleased to see the President’s fiscal year 2014 budget include $200 

million for climate mitigation projects, but this really only scratches the surface of what is needed. 

So, Mr. Weiss, again, there is an estimate of how much funding 

is needed for these projects nationwide. Would you share some information around that topic with us? 

Mr. WEISS. Well, the Congressional Research Service was looking 

at this for the utility industry, and they found that the American 

Society of Civil Engineers estimates we need to spend over $600 

billion between now and 2020 to make our utility system more resistant to disruption from extreme weather. But they could not find 

another estimate besides the ASCE one about it, and so that is 

something we need to do, which, again, in your letter to the President you recommended. 

It is important when looking at the costs of natural gas and coalgenerated electricity that those fuels include the external economic 

costs of their use, which includes climate change and extreme 

weather linked to climate change. Otherwise society is in effect 

subsidizing the use of coal and natural gas by paying these costs 

for damages from extreme weather and then the taxpayers paying, 

you know, $400 a household for disaster relief and recovery. 

Mrs. CAPPS. We need to shift our attitude. And I appreciate your 

comments. This is a major problem, I know. Our energy committee, 

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129 

thing that can’t be solved overnight, but we need to start moving 

in that right direction. 

So, Mr. Chairman, I hope this committee will begin to examine 

the realities of climate change, and what we can do, and what our 

obligations here in this committee are to minimize its impacts. 

I yield back. 

Mr. WHITFIELD. Thank you, Mrs. Capps. 

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

for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. And I appreciate you 

and Mr. Rush holding this hearing. 

At a previous hearing earlier this year, one of our witnesses Mr. 

Gramlich was here representing the wind association, and I asked 

him some question about production tax credit impacting negative 

prices into the grid and ERCOT, and to his credit, we asked some 

questions on the record, and he did answer. My staff was a little 

bit puzzled by the answers, because they don’t conform with the information that we have at the staff level, but I do admit that you 

can look at data and interpret it different ways. So instead of revisiting those questions directly to Mr. Gramlich, I am going to ask 

Dr. Lesser, who is sitting next to him, to take a crack at it. 

So, Dr. Lesser, the issue is the production tax credit for wind, 

which I supported when it was initially proposed, because wind 

power was a startup, struggling sector of the energy economy, and 

I felt it was fair to help give it some production tax credits to get 

it off the ground. I think it is a more difficult proposition now, because wind power is firmly established and is a significant part of 

the generation system in States like Texas. 

So my question to you, Doctor, do you think the production tax 

credit impacts the way market prices are in ERCOT in Texas, and 

do you think that it should be allowed to use production tax credit 

to bid negative into the grid, which has happened, although it is 

disputable how often it has happened? 

Mr. LESSER. Thank you, Mr. Barton. 

No, I do not think that wind operators, anyone receiving the 

PTC, should be eligible to bid negatively. There is no reason for 

that. Studies by the Northridge Group show that negative prices 

are far more prevalent than have been indicated. Those negative 

prices are affecting the viability of conventional generators, which 

has an effect on reliability. As far as the PTC going on, you now 

have these direct subsidies and mandates for 35 years since 

PURPA was passed. 

One of the arguments you will often hear is that the wind industry requires additional subsidies to be cost competitive, yet earlier 

on we hear wind is competitive, that it is cheaper. The problem 

with that, well, if it is cheaper, why do you continue to need subsidies? 

The other issue I would raise is that if—the problem is what you 

are doing is you are distorting the market so much by having a 

subsidy that is, in fact, greater than the average market price in 

many areas—for example, the price in PJM that serves D.C. as 

well as much of the Upper Midwest and Atlantic States was less 

than the $35 value of the PTC last year. When you have a subsidy 

that is larger than the average market price, that introduces huge 

130 

economic distortions. In the long run, that drives out investment of 

other resources. That means that consumers will end up paying 

higher prices. They will not—again, it is simply an economic fallacy 

to say that you can subsidize your way to greater economic growth, 

lower prices. It just cannot happen. 

Mr. BARTON. Is there a way, absent eliminating the production 

tax credit, to change the rules to prevent using that subsidy to bid 

into a competitive market, or is the only way to prevent it is to 

eliminate the subsidy? 

Mr. LESSER. Well, I think the easier way to prevent it is to just 

eliminate the subsidy. There may be ways. FERC could oversee 

markets and change the way resources are allowed to bid that receive the subsidy, but my preference would be the simpler approach, which is just eliminate the subsidy, then you eliminate the 

problem entirely. 

Mr. BARTON. I think in fairness I should give Mr. Gramlich an 

opportunity to counterpoint what Dr. Lesser just said. 

Mr. GRAMLICH. Thank you. 

I mean, the ability to occasionally bid negative is, of course, 

available to all resources on the grid, and there are conventional 

power plants that do so at times, and they also receive a variety 

of federal incentives. So if any such line of policy inquiry is pursued, we would urge that they not single out wind. 

Mr. BARTON. Well, that is a true statement, but the problem is 

that with respect to wind power, you are using a Federal subsidy 

of the taxpayer. If somebody with private capital bids negative, 

they are risking shareholder equity, they are not using a Federal 

subsidy directly. With that—— 

Mr. WHITFIELD. The gentleman’s time has expired. 

At this time I will recognize the gentlelady Dr. Christensen for 

5 minutes. 

Mrs. CHRISTENSEN. Thank you, Mr. Chairman. And I thank you 

and the ranking member for holding this hearing. It has been very 

informative, as we in the Virgin Islands work to transition to cleaner, less expensive fuel. 

During the hearings the subcommittee has had on challenges to 

electric reliability, we haven’t heard much about how climate 

change is already affecting electric utilities. We are beginning to 

hear some of that today. And, of course, with my district being in 

the path of hurricanes every year, it is a serious concern to me as 

we can expect stronger storms, I think, which will affect our utility. 

And our utility is already struggling to keep lights on. Just yesterday we had power outages, and that is an every-other-day occurrence in St. Thomas. 

We know that climate change, Mr. Weiss, will mean more heat 

waves, droughts and wildfires. Are there examples of these kinds 

of extreme weather events impairing the operation of power plants? 

Mr. WEISS. Thank you. 

Yes, there are. From last summer’s drought, at least four states, 

California, New York, Illinois and, I believe, Colorado, but let me 

check on that, did experience disruption of their power plants because they couldn’t get enough cooling water to make the plants 

run. I am sorry, it was Connecticut. California, Connecticut, Illinois 

and New York. 

131 

And it is interesting that the draft National Climate Assessment 

predicts that future climate change is going to interfere with electricity generation. Let me just quote from them; quote, ‘‘These infrastructure systems, including electricity, will be affected by various climate-related events and processes.’’ 

So what is past is prologue in terms of climate change disrupting 

the operation of power plants. 

Mrs. CHRISTENSEN. And if we fail to act, and climate change continues unabated, extreme weather events would be expected to become more frequent and more disruptive? 

Mr. WEISS. Yes. The National Climate Assessment also predicts 

that there will be an increase in extreme weather events, droughts, 

floods, storms, heat waves and wildfires. 

Mrs. CHRISTENSEN. All right. And, you know, in addition to the 

storms, I live on islands, and this was one of the articles from our 

newspaper yesterday. 

So both of my power plants are located near shorelines, so the 

rising sea level is another threat in addition to the storms. So if 

we are concerned about the reliability of our electric grid and government spending, we really need to address climate change. 

Mr. Weiss, has the National Academy of Sciences or any other 

scientific institution determined that we are currently on track to 

avoid dangerous climate change? 

Mr. WEISS. They have—I don’t believe National Academy of 

Sciences has addressed that. However, if you look at how much 

emissions have gone down, the Environmental Protection Agency 

said we have had a 7 percent decline in overall greenhouse gas pollution since 2005. The President committed us to a 17 percent reduction by 2020. So we are reducing our emissions; however, the 

Energy Information Administration predicts that, although emissions are going to go down between now and 2017, they will begin 

rising again in 2017. So, no, we do not appear to be on track to 

avoiding the worst impacts of climate change. 

Mrs. CHRISTENSEN. Well, reducing our carbon pollution by the 

amount necessary to avoid dangerous climate change, I assume, 

will require the power sector, as we have been talking about, to 

transition to cleaner technologies. Is that transition happening fast 

enough? And why are we on track to start to go up again in 2017? 

Mr. WEISS. We are on track to go up again in 2017 because of 

the increase in electricity generation expected from fossil fuel 

sources, even though we are also going to be increasing our renewable generation between now and then. 

What we really need to do is to require the power plants, existing 

power plants, to reduce their carbon pollution either through legislation, which would be many people’s preferred option, or, failing 

that, the Environmental Protection Agency setting standards to do 

that. That would get us close, but not reach the President’s 17 percent reduction goal by 2020. 

Mrs. CHRISTENSEN. And, you know, just in closing, and I say this 

all the time, but we talk about the costs of electricity. We are very 

concerned about costs, and so a lot of times the talk turns to coal 

or fossil fuels, but the costs in terms of public health is something 

that we never take into consideration, the longer-term costs. And 

132 

so cost is more than just the cost of the fuel, it is the cost of the 

impact to our communities, to the health of our children. 

And with that, I will yield back my time. 

Mr. WHITFIELD. The gentlelady’s time is expired. 

At this time I recognize the gentleman from West Virginia Mr. 

McKinley for 5 minutes. 

Mr. MCKINLEY. Thank you, Mr. Chairman. In deference to the 

time, I am going to try to get a couple questions in; then I would 

like to yield some time to my colleague from Colorado. 

First, Mr. Sypolt, I want to thank you for your investment in the 

development of the Marcellus shale, shale gas, and what you are 

doing in West Virginia. 

What do you think—do you think that could lead to more gas 

turbine development, electric power generation in West Virginia or 

around the country? 

Mr. SYPOLT. Well, absolutely I do, Congressman. The Marcellus 

shale is extremely real. Three years ago you hardly had any production; today it is 10.4 Bcf a day. I mean, so it is extremely real. 

And clearly when you have, you know, cheap energy, you have the 

opportunity to use that and, you know, to have turbines to develop 

or produce additional electricity. You know, those can certainly be 

set in West Virginia or in other surrounding states where they 

have good access to the Marcellus shale, so—and I think that 

asset—— 

Mr. MCKINLEY. Does that add to more—— 

Mr. SYPOLT [continuing]. Is going to continue to grow. 

Mr. MCKINLEY. That will only strengthen more of the reliability 

of the grid if we could—— 

Mr. SYPOLT. Absolutely. 

Mr. MCKINLEY. So secondly, and continuing this same line of 

questioning, if—and you have heard earlier from some of the comments made about the subsidies to the fossil fuel, coal, oil and gas. 

If we were to eliminate those subsidies, what effect would that 

have on the grid? 

Mr. SYPOLT. You know, I don’t know that I am really the best 

one to answer that, you know, but I would say that, you know, Dominion has all forms of energy, Congressman, as I mentioned earlier. You know, we are also looking at wind, you know. 

Mr. MCKINLEY. Well, let us look if any others would like to add. 

If we were to eliminate the subsidies for all renewables and fossil 

fuels, what effect would that have on the grid reliability? 

Mr. LESSER. I would be happy to answer that—— 

Mr. MCKINLEY. Please. 

Mr. LESSER [continuing]. Sir. I don’t think there would be any 

adverse impact on reliability. I think what you would see is much 

more efficient investment in generating resources for the long term, 

and it would be easier to integrate resources onto the grid. You 

would have less investment in subsidized intermittent generation. 

However, the subsidies—when you look at the subsidies in contrast 

to on a total-dollar basis, as Mr. Gramlich has done, but look at 

it on a per-megawatt-hour basis, the Energy Information Administration has issued reports saying that intermittent resource subsidies are far greater, you know, in combining both that PTC and 

our requirements to use through renewable portfolio standards. So 

133 

I don’t think there would be any adverse impacts. I think the grid 

would actually benefit. 

Mr. MCKINLEY. Thank you. 

Mr. Chairman, I would like to yield back the balance of my time, 

then, to my friend from Colorado. 

Mr. WHITFIELD. OK. The gentlemen yields to the gentleman from 

Colorado. 

Mr. GARDNER. I thank my colleague from West Virginia. I appreciate you yielding time. 

Mr. Gramlich, there was a question I think that you had received 

from Mr. Waxman that I wanted to clarify a little bit if I could. I 

have been a strong supporter of renewable energy and certainly 

wind resources where it makes sense, and I try to make sure that 

we are doing so from a—as market-based policies as we can. And 

I think the question was about whether or not there was backup 

baseload generation required for wind, and I believe your answer 

was there is not—there is no baseload backup required. 

Mr. GRAMLICH. There are reserves required for wind, and coal, 

and gas and all resources. All resources have the potential to go off 

at any moment. And ever since we have had a power grid, we have 

had backup across the grid that fills in in case any resource goes 

offline. 

Mr. GARDNER. And thank you. I just want to restate some of the 

testimony in a committee hearing earlier this year with Mr. 

Moeller from the FERC, Chairman of the FERC Commission, talking about backup wind generation. He said that—I asked the question, so for every 5 megs, you need 4 megs of baseload in some instances. And he said that that is correct. 

So, I mean, certainly that was what Mr. Moeller at FERC had 

testified before this committee. 

Mr. GRAMLICH. I would love to have the opportunity to perhaps 

provide written testimony in response to that. 

Mr. GARDNER. Sure. I mean, do you think he was wrong when 

he said that? 

Mr. GRAMLICH. Yes. There is a tiny incremental addition of reserves needed to bring on new wind, and it is, in fact, no greater 

than what is needed when new conventional sources are brought 

onto the grid. 

Mr. GARDNER. Well, I would be interested in hearing if the commissioner was correct. 

Mr. GRAMLICH. I know him well. We will be happy to discuss, 

yes. 

Mr. GARDNER. Mr. Weiss, do you think hydropower is a renewable energy? 

Mr. WEISS. Yes, it is. 

Mr. GARDNER. One of the concerns I have, in Colorado they 

passed a Senate Bill 252 at the state legislature that requires rural 

cooperatives to increase their renewable energy standard to 25 percent. They get approximately 12 percent of its power needs from 

WAPA, which gets tremendous amount of its power from Federal 

Hydropower. That is where WAPA gets it power, Federal Hydropower, yet none of that power is counted under the Colorado Renewable Energy Standard because it is hydropower. It is not considered a renewable energy resource. Do you think we should 

134 

change the law in Colorado to include Federal Hydropower since it 

is a renewable energy resource in your mind? 

Mr. WEISS. I would leave that to Coloradoans to decide. 

Mr. GARDNER. But if you were there, you would say, yes, it is renewable? 

Mr. WEISS. If I was there, I would look at the whole panoply of 

resources. I think the reason—— 

Mr. GARDNER. You just said renewable, you thought Federal Hydropower is renewable. 

Mr. WEISS. Yes. I think the reason why some people do not consider it renewable is because there are upstream impacts from 

building dams. I think what we ought to be doing is retrofitting existing dams with much more effective turbines, and that ought to 

be included as renewable. 

Mr. GARDNER. Thank you, Mr. Chairman. 

Mr. WHITFIELD. Gentleman’s time is expired. 

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

NcNerney, for 5 minutes. 

Mr. MCNERNEY. Thank you. 

Mr. WHITFIELD. Then we have a vote on the floor, so after his 

questions, we are going to terminate this rather quickly. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Wind energy comes on and off on it slowly because on a large 

scale windmill, you have hundreds or maybe thousands of large 

windmills over hundreds of square miles. If one or two comes on 

or shuts off, it has very little impact, so over time and over space, 

that impact of coming on and off is very slow and gradual, so it 

doesn’t really affect the grid like shutting down a large power 

plant. I just wanted to make sure that I had an opportunity to say 

that. 

Mr. Cicio, I certainly enjoyed your testimony, but it was a little 

confusing in a sense, and let me explain why. I understand your 

concerns about lack of Federal oversight on natural gas pipeline reliability, but often we hear from industry, we hear from the other 

side that oversight, Federal oversight is a problem; we need to let 

the market straighten things out. So my question is, is this—do 

you propose the lawmakers create regulations to keep customers 

safe while also taking note of business considerations—is there a 

way we can do that here? Is that too big of a broad of a—— 

Mr. WEISS. Remember who we are. We are consumers. We have 

a different perspective. We are the companies that rely upon reliability of that grid, and we see that there is an agency that is overseeing electric reliability nationwide, and that is NERC. We do not 

see an organization that is looking at pipeline reliability, for example, at peak demands. 

The pipelines in this country, and the regulations are very good. 

What has changed is the market. The market has changed. We 

have, over a 4-year period of time, significant changes to coal-fired 

power generation, new natural gas coming on. We have the industrial renaissance happening that is going to increase natural gas 

demand on those same pipelines. 

Mr. MCNERNEY. So, it is from a customer’s point of view, there 

is a need for—— 

Mr. WEISS. Yes. 

135 

Mr. MCNERNEY [continuing]. Oversight. To make sure that these 

things are reliant. 

Mr. WEISS. Shame on us if we don’t know if there is a pipeline 

reliability issue. 

Mr. MCNERNEY. Thank you. 

Mr. Weiss, in your testimony, you mentioned that climate change 

causes increased instances of extreme weather events which in 

turn threatens electrical reliability. Do you think that that—we 

simply need to invest in better infrastructure, or how would we 

best move forward to improve reliability in face of these extreme 

events? 

Mr. WEISS. I think we need to do two things. First, we need to 

reduce the carbon pollution and other emissions that are responsible for climate change. As I mentioned earlier, we are making 

progress but not nearly fast enough to avert the worst impacts of 

climate change, but second, we do need to improve the resiliency 

of our infrastructure. Representative Capps has proposed creating 

a commission to do that that would look at how much money we 

need and identifying a dedicated source of revenue to pay for it, 

and I would support that proposal. 

Mr. MCNERNEY. Thank you for your brief answer. 

Mr. Shelk, how much—just my own curiosity, how much of any 

do coal—of gas-powered power plants, how much gas do a typical 

plant keep on sight, if any? 

Mr. SHELK. Obviously, gas is different from storing other fuel. 

Mr. MCNERNEY. Yes. 

Mr. SHELK. Some do actually have, in the northeast, LNG Storage, and one of reasons why New England has problems that the 

rest of the country does not have is because the geology of New 

England doesn’t allow for gas storage. Gas is usually only stored 

underground. That is Mr. Sypolt’s business. The plant itself would 

not store gas, per se, except in certain situations where there are 

LNG facilities nearby, but many of the plants that are gas fired are 

also dual fuel with oil and so that is one of the major sources of 

power at peak time in New England is the dual fuel plants. 

Mr. MCNERNEY. Do you think we can create a broad policy on 

a Federal level that provides adequate flexibility to regional overseers? 

Mr. SHELK. I do. I think actually FERC is going about it the 

right way. They are approaching this, as you heard in the prior 

hearings, with regional hearings, technical conferences. They are 

holding all of us—our feet to the fire, and I think we do have that 

infrastructure. 

With all due respect to Mr. Cicio, he misunderstands NERC. 

NERC does not order the development of electric or gas assets, so 

I would argue that NERC actually is the natural gas reliability entity in the same way because they are drawing attention to these 

issues. Their Phase II report will be out very shortly. I think the 

committee can rest assured that you have the regulators and the 

grid operators and all of us in the market very, very in tune to 

these issues and we are going to solve them. 

Mr. MCNERNEY. Thank you. 

I yield back, Mr. Chairman. 

Mr. WHITFIELD. Thanks very much. 

136 

And that terminates today’s hearing. Once we adjourn, Mr. Shelk 

and Mr. Cicio can get together and talk this out. But we appreciate 

the testimony that all of you gave, and we continue to look forward 

to working with you on grid reliability and integration cost. 

And with that, without objection, I will enter into the record a 

statement from the Natural Gas Council and the American Public 

Power Association. 

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

Mr. WHITFIELD. The record will remain open for 10 days, and 

some of you will be receiving some additional questions. We would 

appreciate your response, and so thank you, once again. The hearing is now concluded. Thank you. 

[Whereupon, at 11:05 a.m., the subcommittee was adjourned.] 

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