[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
AMERICAN ENERGY SECURITY AND INNOVATION: AN ASSESSMENT OF PRIVATE-
SECTOR
SUCCESSES AND OPPORTUNITIES IN ENERGY EFFICIENT TECHNOLOGIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, FEBRUARY 26, 2013
__________
Serial No. 113-8
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania GENE GREEN, Texas
MICHAEL C. BURGESS, Texas DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee LOIS CAPPS, California
Vice Chairman MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana ANTHONY D. WEINER, New York
ROBERT E. LATTA, Ohio JIM MATHESON, Utah
CATHY McMORRIS RODGERS, Washington G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi JOHN BARROW, Georgia
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BILL CASSIDY, Louisiana DONNA M. CHRISTENSEN, Virgin
BRETT GUTHRIE, Kentucky Islands
PETE OLSON, Texas KATHY CASTOR, Florida
DAVID B. McKINLEY, West Virginia JOHN P. SARBANES, Maryland
CORY GARDNER, Colorado JERRY McNERNEY, California
MIKE POMPEO, Kansas BRUCE L. BRALEY, Iowa
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
STEVE SCALISE, Louisiana BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JERRY McNERNEY, California
JOSEPH R. PITTS, Pennsylvania PAUL TONKO, New York
LEE TERRY, Nebraska EDWARD J. MARKEY, Massachusetts
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
ROBERT E. LATTA, Ohio GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington LOIS CAPPS, California
BILL CASSIDY, Louisiana MICHAEL F. DOYLE, Pennsylvania
PETE OLSON, Texas JOHN BARROW, Georgia
DAVID B. McKINLEY, West Virginia DORIS O. MATSUI, California
CORY GARDNER, Colorado DONNA M. CHRISTENSEN, Virgin
MIKE POMPEO, Kansas Islands
ADAM KINZINGER, Illinois KATHY CASTOR, Florida
H. MORGAN GRIFFITH, Virginia JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California (ex
FRED UPTON, Michigan (ex officio) officio)
C O N T E N T S
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 2
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 3
Prepared statement........................................... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 5
Prepared statement........................................... 5
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 7
Prepared statement........................................... 8
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 214
Witnesses
Hon. Lisa Murkowski, A United States Senator from the State of
Alaska, Ranking Member, Senate Energy and Natural Resources
Committee...................................................... 9
Prepared statement........................................... 12
Hon. Jeanne Shaheen, A United States Senator from the State of
New Hampshire.................................................. 14
Prepared statement........................................... 17
Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency,
Office of Energy Efficiency and Renewable Energy, U.S.
Department of Energy........................................... 21
Prepared statement........................................... 23
Answers to submitted questions............................... 279
Kevin C. Kosisko, Vice President Service, North America, ABB,
Inc., on Behalf of National Electrical Manufacturers
Association and Industrial Energy Efficiency Coalition......... 51
Prepared statement........................................... 54
Britta MacIntosh, Vice President, Business Development, NORESCO,
on Behalf of Federal Performance Contracting Coalition......... 95
Prepared statement........................................... 97
James Crouse, Executive Vice President of Sales and Marketing,
Capstone Turbine Corporation, on Behalf of U.S. Combined Heat
and Power Association.......................................... 102
Prepared statement........................................... 104
Helen A. Burt, Senior Vice President and Chief Customer Officer,
Pacific Gas and Electric Company............................... 114
Prepared statement........................................... 116
R. Neal Elliott, Associate Director of Research, American Council
for an Energy-Efficient Economy................................ 127
Prepared statement........................................... 129
Ted Gayer, Co-Director, Economic Studies and Joseph A. Pechman
Senior Fellow, The Brookings Institute......................... 144
Prepared statement........................................... 146
Submitted Material
Press release from cable companies, submitted by Mr. Shimkus..... 216
Report entitled, ``Doubling U.S. Energy Productivity by 2030,''
by the Alliance Commission on National Energy Efficiency
Policy, submitted by Mr. Kinzinger............................. 219
Statement of Arkema, Inc., submitted by Mr. Whitfield............ 253
Statement of The Pew Charitible Trusts, submitted by Mr.
Whitfield...................................................... 258
Statement of The Alliance for Industrial Efficiency, submitted by
Mr. Whitfield.................................................. 261
Statement of the American Chemistry Council, submitted by Mr.
Whitfield...................................................... 265
Statement of the Heat is Power Association, submitted by Mr.
Whitfield...................................................... 270
AMERICAN ENERGY SECURITY AND INNOVATION: AN ASSESSMENT OF PRIVATE-
SECTOR SUCCESSES AND OPPORTUNITIES IN ENERGY EFFICIENT TECHNOLOGIES
----------
TUESDAY, FEBRUARY 26, 2013
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:08 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Scalise,
Shimkus, Pitts, Terry, Burgess, Cassidy, Olson, McKinley,
Gardner, Pompeo, Kinzinger, Griffith, Upton (ex officio), Rush,
McNerney, Tonko, Capps, Barrow, Matsui, Castor, Welch, and
Waxman (ex officio).
Staff present: Nick Abraham, Legislative Clerk; Gary
Andres, Staff Director; Charlotte Baker, Press Secretary; Mike
Bloomquist, General Counsel; Matt Bravo, Professional Staff
Member; Allison Busbee, Policy Coordinator, Energy and Power;
Patrick Currier, Counsel, Energy and Power; Carolyn Ferguson,
Staff Assistant; Tom Hassenboehler, Chief Counsel, Energy and
Power; Heidi King, Chief Economist; Ben Lieberman, Counsel,
Energy and Power; Gib Mullan, Chief Counsel, Commerce,
Manufacturing, and Trade; Mary Neumayr, Senior Energy Counsel;
Andrew Powaleny, Deputy Press Secretary; Chris Sarley, Policy
Coordinator, Environment and Economy; Lyn Walker, Coordinator,
Admin/Human Resources; Jeff Baran, Democratic Senior Counsel;
Phil Barnett, Democratic Staff Director; Greg Dotson,
Democratic Staff Director, Energy and Environment; Caitlin
Haberman, Democratic Policy Analyst; and Alexandra Teitz,
Democratic Senior Counsel, Environment and Economy.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF KENTUCKY
Mr. Whitfield. Good morning, and I would like to call this
hearing to order this morning. I will recognize myself for an
opening statement.
Anyone who focuses on energy issues, I believe, has been
amazed at recent discoveries of resources that make it possible
for America to be energy independent, both generating
electricity and producing fuel for transportation purposes.
Certainly, supply and demand affects price and if we can
control price, we can be more competitive in the global
marketplace, strengthen our economy, and create jobs. That is
certainly a goal to which we all aspire.
Now, we have had several hearings about supply in this
subcommittee, and today, we are going to focus on demand, and
specifically, energy efficiency. In fact, today's hearing is
entitled ``American Energy Security and Innovation: An
Assessment of Private-Sector Successes and Opportunities in
Energy Efficient Technologies.'' Just as we have been
successful in finding additional resources for energy
production, we have also made great strides in energy
efficiency, and we can do even more.
History teaches us that nothing is more efficient than the
free market. The only thing you need to spur than improve
energy efficiency is profit-seeking companies responding
rationally to high energy bills. Any company that doesn't use
energy as wisely as possible will lose ground to a competitor
that does. This is why free economies are the most efficient
and have the lowest energy inputs per units of gross domestic
product when you contrast that particularly with centrally-
planned economies, which are certainly not as efficient.
We all understand that government has a very important role
to play and has contributed much in this area, such as
utilizing the latest advances to improve efficiency in federal
buildings, and in conducting energy efficiency research. And
all of us are fans of the energy savings performance contract
program over at DOE, and it continues to do a great job, and we
look forward to making sure that it continues to make that kind
of contribution.
We have a great panel of witnesses today. We have three
panels, and on the first panel, we are very fortunate to have
two United States senators. We have Senator Lisa Murkowski of
Alaska, who has been a leader in the energy sector. Senator, we
really appreciate your taking time to be with us today. And
Senator Shaheen of New Hampshire was given a speaking
engagement this morning, and she is on her way, and it is not
seldom that we have two senators over here, so we are always
going to pay particular attention to what they say, because as
they say, the House and the Senate need to work closely
together on all these issues. So we are excited about the
witnesses this morning, and I will introduce the three panels
as we come to them.
[The prepared statement of Mr. Whitfield follows:]
Prepared statement of Hon. Ed Whitfield
Energy prices are a function of supply and demand, and high
prices are a clear sign that supply is struggling to keep up
with demand. That is why expanding domestic energy supplies is
a big part of the solution to the nation's energy challenges
and one that this subcommittee will continue to address. But
this morning's hearing will focus on the demand side of the
energy equation, and specifically private sector efforts to
develop and utilize innovative technologies and processes to
reduce waste and cut costs.
History teaches us that nothing is more efficient than the
free market. The only thing you need to spur innovations that
improve energy efficiency is profit-seeking companies
responding rationally to high energy bills. Any company that
doesn't use energy as wisely as possible will lose ground to a
competitor that does. This is why free economies are the most
efficient and have the lowest energy inputs per unit of gross
domestic product. Contrast that with centrally planned
economies which are among the least efficient.
These private sector innovations can take the form of
energy efficient technologies like combined heat and power
systems. They can also take the form of novel instruments like
energy savings performance contracts. We will discuss both
kinds of innovations today.
The benefits of energy efficiency are something that both
Republicans and Democrats can agree upon. They are also
something that both the House and the Senate can agree upon,
which is why I am pleased that Senators Lisa Murkowski and
Jeanne Shaheen are joining us to discuss energy efficiency
efforts underway in the Senate. Those of us in the House are
always ready to learn from the world's greatest deliberative
body.
Some make the mistake of thinking that efficiency only
happens as a result of federal regulations or other mandates.
But the stories we will hear from our private sector witnesses
demonstrate otherwise. Utilities, manufacturers, commercial
property owners and others are continually developing clever
new ways to save on their energy costs, and are not waiting for
orders from Washington DC.
In fact, government policy can sometimes get in the way of
energy efficiency. For example, a provision included in the
Energy Independence and Security Act of 2007 mandates the
elimination of all fossil fuel-generated energy use in new and
modified federal buildings by the year 2030. This federal
mandate potentially restricts the adoption of high-efficiency
technologies such as natural gas combined heat and power and
waste heat recovery systems in federal facilities. We need to
reconsider any and all federal impediments to energy
efficiency.
On the other hand, there is a constructive role for the
government to play, such as utilizing the latest advances to
improve efficiency in federal buildings, and in conducting
energy efficiency research. We need to steer government efforts
in a positive direction.
Necessity is the mother of invention, and the necessity
brought on by expensive energy, tight budgets, and the
pressures of global competition has fostered some great private
sector advances in efficiency. I look forward to learning more
about these exciting developments and yield back the balance of
my time.
Mr. Whitfield. And with that, Mr. Rush, I would recognize
you for an opening statement.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. I want to thank you, Mr. Chairman, for holding
today's hearing on the successes and opportunities in energy
efficiency technology. It is my sincere hope that after hearing
from today's panel of witnesses, members on both sides of the
aisle will be able to come together and move their country's
energy policy forward by working to enact common sense energy
efficiency legislation.
Mr. Chairman, I remain optimistic that this subcommittee
may return to the days of enacting bipartisan and comprehensive
energy policy like we did most recently in '05 and '07. I
believe that the area of energy efficiency may, in fact, be the
opportunity for us to do so.
The story of energy efficiency is one that is filled with
success stories that I really hope propel our Nation forward by
making us more independent and more secure, while also reducing
the cost of energy, both in our pocketbooks and its impact on
the environment. According to a recent ACCC study, U.S. energy
consumption in 2010 was less than half of what it would have
been without the energy efficiency improvements made since
1970.
Mr. Chairman, while today's hearing focuses on the progress
made in the private sector, let us not forget that it was the
leadership of State and Federal Government activities that
paved the way for many of these energy efficiency successes.
DOE rulemaking spurred dozens of national efficiency standards
for appliances and equipment since 1987. ACCC--EEE, rather,
found that these existing standards will provide net savings of
$1.1 trillion through 2035, while also reducing carbon
pollution by the equivalent amount of taking approximately 118
coal-fired power plants offline by that same year. In fact, in
2010, overall U.S. energy use was 7 percent less than it would
have been without these extending--existing, rather, standards.
However, Mr. Chairman, it is important to note that the
ACEEE also found, and I quote, ``The prospect for future
improvements is large.'' In fact, the report estimates that
additional energy efficiency efforts could reduce U.S. energy
use by 42 to 59 percent over current projections, which will
create over one million jobs and increase U.S. GDP by $100 to
$200 million by the year 2050.
So, Mr. Chairman, it is important that the Federal
Government does not abdicate its responsibility, its leadership
role, of promoting, of encouraging, of enticing interested
stakeholders to continue with the progress that has already
been made in energy efficiency technologies so that we may keep
moving forward, moving our Nation forward. We have a rich and
strong legacy to stand on, Mr. Chairman, and let us not abandon
the work that has already been done. Energy efficiency has been
the low-hanging fruit that may, indeed, as I said earlier,
bring both sides together in a legislative manner while also
making our Nation safer, more secure, and more attentive to the
impacts of climate change.
Mr. Chairman, I look forward to hearing from these
outstanding members of the other body, our Nation's leaders,
and I look forward to this hearing. And with that, I yield back
the balance of my time.
[The prepared statement of Mr. Rush follows:]
Prepared statement of Hon. Bobby L. Rush
Thank you, Mr. Chairman, for holding today's hearing on the
successes and opportunities in energy efficient technologies.
Mr. Chairman, it is my sincere hope that after hearing from
today's panel of witnesses, members from both sides of the
aisle will be able to come together and move the country's
energy policy forward by working to enact commonsense energy
efficiency legislation.
I remain optimistic that this subcommittee may return to
the days of enacting bipartisan and comprehensive energy
policy, like we did most recently in 2005 and 2007, and I
believe the area of energy efficiency may, in fact, provide us
with an opportunity to do so.
Mr. Chairman, the story of energy efficiency is one that is
filled with success stories that have really helped propel our
country forward by making us more independent and secure, while
also reducing the cost of energy, both in our pocketbooks and
its impact to our environment.
According to a recent American Council for an Energy-
Efficient Economy (ACEEE) study, U.S. energy consumption in
2010 was less than half of what it would have been without the
energy efficiency improvements made since 1970.
Mr. Chairman, while today's hearing focuses on the progress
made in the private sector let us not forget that it was the
leadership of state and federal government that paved the way
for many of these energy efficiency successes.
Department of Energy (DOE) rulemakings spurred dozens of
national energy efficiency standards for appliances and
equipment since 1987.
ACEEE found that these existing standards will provide net
savings of $1.1 trillion through 2035, while also reducing
carbon pollution by the equivalent amount of taking
approximately 118 coal-fired power plants offline by that same
year.
In fact, in 2010, overall U.S. electricity use was 7% lower
than it would have been without these existing standards.
However, Mr. Chairman, it is important to note that the
ACEEE study also found that ``the prospect for future
improvements is large.''
In fact, the report estimates that additional energy
efficiency efforts could reduce U.S. energy use by 42-59% over
current projections, which would create over a million jobs and
increase U.S. GDP by $100-200 billion by the year 2050.
So, Mr. Chairman, it is important that the federal
government does not abdicate its leadership role or
responsibility of promoting, encouraging, and enticing
interested stakeholders to continue with the progress that has
already been made in energy efficiency technologies so that we
keep moving the nation forward.
Energy efficiency has proven to be the low-hanging fruit
that may indeed bring both sides together, legislatively, while
also making our country safer, more secure, and more attentive
to the impacts of climate change.
So I look forward to hearing from today's panel of expert
witnesses on the successes and opportunities in energy
efficiency technologies, and with that I yield back the balance
of my time.
Mr. Whitfield. Well thank you, Mr. Rush.
At this time, I recognize the chairman of the full
committee, Mr. Upton, for a 5-minute opening statement.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Well thank you, Mr. Chairman. I want to thank
both of our senators for being here. Thanks for crossing the
Capitol this morning to provide your perspective on energy
efficiency innovation. Energy efficiency is not only a
bipartisan issue, but as your presence here today demonstrates,
there is bicameral interest as well.
You know, for an economy to thrive, it does need energy. In
fact, increased energy consumption is often a harbinger of
economic growth, a very good thing by any measure. When we talk
about energy efficiency, I believe our goal is to maintain and
enhance our economic growth by finding ways to maximize the
ways that we use energy, to get the most bang for the buck.
Energy efficiency measures are some of the simplest and most
affordable ways to address U.S. energy demand. The U.S. has
steadily improved its energy productivity as a result of
advances in technology driven by private sector innovation.
Reducing waste and consuming less energy are common sense
strategies to cut costs, which is why the industrial and
manufacturing sectors have undertaken significant efforts to
improve efficiency and reap the resulting economic benefits.
But significant energy efficiency opportunities remain, and we
will hear about some of those opportunities, as well as the
challenges, from our distinguished panelists today.
We have got to remember that as the sequester takes center
stage this week, that the Federal Government is the Nation's
largest user of energy, and sensibly utilizing energy-saving
techniques can significantly reduce the amount of taxpayer
dollars spent on federal energy costs.
So on behalf of all of our colleagues, I welcome both of
you here, and yield the balance of my time to Mr. Gardner.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
I want to welcome Senator Murkowski and Senator Shaheen--
thank you for crossing the Capitol this morning to provide your
perspectives on energy efficiency innovation. Energy efficiency
is not only a bipartisan issue, but as your presence here today
demonstrates, there is bicameral interest as well.
For an economy to thrive, it needs energy. In fact,
increased energy consumption is often a harbinger of economic
growth--a very good thing by any measure. When we talk about
energy efficiency, I believe our goal is to maintain and
enhance our economic growth by finding ways to maximize the
ways we use energy--to get the most bang for the buck. Energy
efficiency measures are some of the simplest and most
affordable ways to address U.S. energy demand. The U.S. has
steadily improved its energy productivity as a result of
advances in technology driven by private sector innovation.
Reducing waste and consuming less energy are commonsense
strategies to cut costs, which is why the industrial and
manufacturing sectors have undertaken significant efforts to
improve efficiency and reap the resulting economic benefits.
But significant energy efficiency opportunities remain, and
we will hear about some of those opportunities--as well as the
challenges--from our distinguished panelists today. We must
also remember, as the sequester takes center stage this week,
that the federal government is the nation's largest user of
energy, and sensibly utilizing energy savings techniques can
significantly reduce the amount of taxpayer dollars spent on
federal energy costs.
On behalf of all my colleagues on the Energy and Commerce
Committee, I want to again thank Senators Murkowski and
Shaheen--and all of our panelists--for taking the time to be
with us today, and we look forward to working together on these
issues in the 113th Congress.
Mr. Gardner. Thank you, Mr. Chairman, and thank you,
Chairman Whitfield and Ranking Member Rush, thank you for
holding this hearing today. Over the past 2 years, I have
become increasingly more interested in this topic of energy
efficiency, and look forward to hearing our witness's testimony
this morning.
There is a lot more that the Federal Government in
particular could be doing to become more energy efficient,
since we truly are the largest energy consumer in the Nation.
That is why I have partnered with Mr. Welch of Vermont, who
also serves on this committee, to form a caucus solely focused
on advancing energy efficiency in a way that helps the
environment and the taxpayer. Our caucus focuses on performance
contracting, whether they be energy savings performance
contracts, or utility energy service contracts. ESPCs and UESCs
allow private companies to perform energy upgrades by taking on
all the risks associated with those improvements. The company
only gets paid when the monetary savings materialize. They are
a win-win for government and the taxpayer, creating private
sector jobs along the way.
I truly believe that energy efficiency is an issue that
Republicans and Democrats can come together on, as we have done
in Colorado. And during times when this city can seem so
partisan to the rest of the country, I think we should jump at
this opportunity to do so. I will point out, however, that
there is one minor impediment to moving forward with ESPCs, and
in the way that many of us in this room would like to do so.
While OMB does not score ESPCs, CBO does. Even though it saves
money, it has no appropriated dollars with it. It is
unfortunately restricting our ability to utilize a tool that
makes complete sense during an economic downturn, and during a
time when the Federal Government is trying to find a way to
save money.
I look forward to working with everyone on this issue, and
the others in this room as we discuss what we can do to
encourage energy efficiency here in Congress.
Thank you, Mr. Chairman. I yield the remainder of my time.
Mr. Whitfield. Well thank you, Mr. Gardner, and at this
time, I recognize the ranking member of the full committee, the
gentleman from California, Mr. Waxman, for 5 minutes.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
At its heart, energy efficiency is about reducing waste.
Doing more with less. This frees up energy supplies, saves
money, and reduces dangerous carbon pollution.
Energy efficiency is good for consumers, good for business,
good for our economy and job creation, and good for fighting
dangerous climate change.
A recent report from the International Energy Agency
highlights the critical role of energy efficiency in slowing
dangerous climate change. IEA concluded that if the world does
not take action to reduce carbon pollution by 2017, then the
energy infrastructure existing at that time will make it
impossible to limit warming to 2 degrees Celsius. In other
words, we have just 4 years to take serious actions to reduce
carbon pollution, or we will be locked into a path forward that
will lead to devastating climate change. But if we invest now
in energy efficiency, we can give ourselves more time.
According to the IEA, the rapid deployment of energy
efficiency measures would give the world at least 5 additional
years to develop long-term solutions. IEA also found that there
are huge efficiency opportunities available. Cost effective
energy efficiency measures using technology available today
could reduce expected future energy use by over 40 percent.
These measures, of course, would save consumers and businesses
over $11 trillion through 2050. Two-thirds of the potential
energy efficiency savings remain untapped.
Existing efficiency standards will provide net savings of
over $1 trillion through 2035, while reducing annual carbon
emissions by 470 million metric tons. That is equivalent to the
annual emissions from over 100 coal-fired power plants. Without
these existing standards, a typical household's electricity use
would be about 35 percent higher.
Buildings account for about 40 percent of our total energy
consumption, and there is a lot we can do to make them more
efficient. Tools for improving efficiency include building
efficiency codes, performance goals, information disclosure,
technical support, innovative financing approaches, and
reduction of market barriers.
We are going to hear today from two very distinguished
members of the Senate. Senator Shaheen worked together with
Senator Portman on a bipartisan bill that includes many good
ideas. Senator Murkowski in the last Congress worked with
Senator Bingaman on a package of consensus energy efficiency
standards. We should build on both of these bipartisan efforts.
We need to be ambitious. Study after study has identified a
myriad of ways we could save energy, save money, and reduce
dangerous carbon pollution.
I look forward to hearing the testimony from our two
senators and other witnesses today, and working on a bipartisan
basis to do something that I think is in the best interest of
the American people. Yield back the balance of my time.
[The prepared statement of Mr. Waxman follows:]
Prepared statement of Hon. Henry A. Waxman
At its heart, energy efficiency is about reducing waste.
Doing more with less. This frees up energy supplies, saves
money, and reduces dangerous carbon pollution.
Energy efficiency is good for consumers, good for
businesses, good for our economy and job creation, and good for
fighting dangerous climate change.
A recent report from the International Energy Agency (IEA)
highlights the critical role of energy efficiency in slowing
dangerous climate change. IEA concluded that if the world does
not take action to reduce carbon pollution by 2017, then the
energy infrastructure existing at that time will make it
impossible to limit warming to 2 degrees Celsius. In other
words, we have just four years to take serious actions to
reduce carbon pollution, or we will be locked into a path
forward that will lead to devastating climate change. But if we
invest now in energy efficiency, we can give ourselves more
time.
According to the IEA, the rapid deployment of energy
efficiency measures would give the world at least five
additional years to develop long-term solutions. IEA also found
that there are huge efficiency opportunities available. Cost
effective energy efficiency measures using technology available
today could reduce expected future energy use by over 40%.
These measures, of course, would save consumers and businesses
over $11 trillion through 2050. Two-thirds of the potential
energy efficiency savings remain untapped.
Existing efficiency standards will provide net savings of
over $1 trillion through 2035 while reducing annual carbon
emissions by 470 million metric tons. That's equivalent to the
annual emissions from over 100 coal-fired power plants. Without
these existing standards, the typical household's electricity
use would be about 35% higher.
Buildings account for about 40% of our total energy
consumption, and there is a lot we could do to make them more
efficient. Tools for improving energy efficiency include
building efficiency codes, performance goals, information
disclosure, technical support, innovative financing approaches,
and reduction of market barriers.
We are going to hear today from two very distinguished
members of the Senate. Senator Shaheen worked together with
Senator Portman on a bipartisan bill that includes many good
ideas. Senator Murkowski in the last Congress worked with
Senator Bingaman on a package of consensus energy efficiency
standards. We should build on both of these bipartisan efforts.
We need to be ambitious. Study after study has identified a
myriad of ways we could save energy, save money, and reduce
dangerous carbon pollution.
I look forward to hearing the testimony from our two
Senators and our other witnesses today, and working on a
bipartisan basis to do something that I think is in the best
interest of the American people.
Mr. Whitfield. Thank you, Mr. Waxman, and that concludes
the opening statements, so it is my pleasure now to introduce
our first panel of witnesses. They have already been
introduced, but I will do it again. We have Senator Lisa
Murkowski, a U.S. Senator from Alaska, who is the ranking
member of the Senate Energy and Natural Resources Committee,
and we have the Honorable Jeanne Shaheen, U.S. Senator from New
Hampshire, and as has already been stated, both of you all have
worked on these issues and in a very bipartisan way, and so we
welcome you to this committee. It is my understanding that when
you finish your opening statements, that you both have some
other responsibilities, so we will not be asking you any
questions, but do look forward to your testimony, and Senator
Murkowski, I will start with you and recognize you for 5
minutes.
STATEMENTS OF HON. LISA MURKOWSKI, A UNITED STATES SENATOR FROM
THE STATE OF ALASKA, RANKING MEMBER, SENATE ENERGY AND NATURAL
RESOURCES COMMITTEE; AND HON. JEANNE SHAHEEN, A UNITED STATES
SENATOR FROM THE STATE OF NEW HAMPSHIRE
STATEMENT OF HON. LISA MURKOWSKI
Senator Murkowski. Thank you, Mr. Chairman, Ranking Member
Rush, Mr. Waxman, Mr. Upton, thank you for the opportunity to
be here this morning to focus on an energy efficiency
specifically. I don't know how you do this, but the fact that
you actually have your cups this morning that talk about energy
efficiency--I don't know if you do this for every hearing over
here, but kudos to the committee here for being on subject.
You note in your introduction of me that as the ranking
member on the Energy Committee, I would obviously have an
interest in this, but coming from the State of Alaska, as I do,
where in some of our remote, rural communities, Alaskan
families are spending up to 47 percent of the family's budget
on energy. There is every reason to be efficient. There is
every reason to squeeze everything that you can out of the
energy that comes our way, so I have taken a very keen interest
in it, and as a consumer of energy, as we all are, we should
all be focused on energy and what we can do to make a
difference.
Before I get into the specifics of energy efficiency, I
want to offer some context for it in the position of a broader,
more comprehensive look at energy policy. I brought with me
today one of the Hill's best sellers, this is Energy 20/20, a
brilliant piece of 115 pages focusing on all things energy. And
it is not very often around here that we actually see 200
recommendations on energy policy come out, a focus on energy as
the bigger picture in terms of what we can do to strengthen our
economy. I would commend it to you. It is available on my Web
site. But let me give you the Reader's Digest condensed
version. It starts with a simple premise that energy is good.
You can distill it in a bumper sticker, but it--think about it.
It provides the basis for modern society. It allows us to lead
happy and productive lives. It allows us to produce food, to
manufacture, to communicate, to move. It is all good.
And to give you five easy principles when we talk about
energy, we should strive to make energy abundant, affordable,
clean, diverse, and secure. And to accomplish all this, again,
I outline about 200 different recommendations, but as we think
about energy policy here in this Congress and how to move
forward in an area that really can help us be more efficient in
our use, just think of it in context of these five attributes
as a way to evaluate legislative actions that affect energy.
And I would hope that taken together, we can agree that these
are the attributes that should allow our policies to advance.
Now, as your focus on American energy security and
innovation reminds us, energy--efficiency is more than just
driving energy consumption down. As I say in the blueprint
here, using energy more efficiently is akin to developing more
fuel. It also encompasses the more efficient production of
energy.
Now, we must do more. We must do more to discourage the
inefficiencies that I think we see oftentimes with regulation
and how that is introduced into our energy supply chain. Our
aim with energy efficiency policies should be to require less
energy per unit of gross domestic product, and it is worth
emphasizing that what we want is a rising GDP here as a measure
of increasing prosperity.
To underscore for the discussion of efficiency, we must
never lose sight of the fact that we want our Nation--in fact,
we want the world to be more prosperous, and we know prosperity
is an aid to peace and human development, and energy is an aid
to prosperity, so the title for the hearing today reminds us
that we must see efficiency within the context of energy
security and innovation.
I am honored to be here with Senator Shaheen, who has been
a leader on efficiency during her tenure on the Energy
Committee with me. She continues to work with Senator Rob
Portman on their version of a comprehensive energy efficiency
bill. It was, and it thankfully remains, a bipartisan effort to
make progress in an area where you all have pointed out,
agreement is imminently possible, and I think that we saw this
as the last Congress waned down. We managed to pass an
efficiency bill, the American Energy Manufacturing Technical
Corrections Act. There were only two Members of Congress that
voted against that, so again, when you think about those things
that we can do together, we should be looking to efficiency.
So where do we go on efficiency this year as we look at
ways to boost the efficiency of everything that we are doing,
whether it is from the buildings here, our vehicles, our
appliance, everything? The bill that Senator Shaheen and
Senator Portman will offer, I think provides a promising path
that is worthy of our consideration. You will see, complements
of their work with reports from private sector associations
like the Business Roundtable, the National Association of
Manufacturers, the Alliance to Save Energy, we must continue to
encourage outside stakeholders to reach these voluntary
consensus agreements so that efficiency does not become
synonymous with this top down approach of mandates that are
issued by the Federal Government. I think given the constraints
on federal finances that has been mentioned and the failure of
mandates to deliver on certain promised results, those of us in
the Federal Government should also put our own House in order.
And as a start, I am going to be calling upon the GAO to review
current funding and past performance of residential,
commercial, and industrial energy efficiency programs within
DOE, and then propose new authorization levels based on this
review.
Now finally, you have appropriately called attention with
this hearing to private sector successes and opportunities, and
as private--as President Reagan's Administration reminded us
more than 25 years ago, the greatest gains in energy efficiency
come from the private sector in a growing economy. So here, the
government's priority should be the removal of barriers that
stand in the way of their investments and the economic growth
that make them possible.
Again, I thank you for the opportunity to come over. I
think it is important that we share our ideas between the two
Houses, certainly amongst members and our parties, and I
welcome the opportunity for future dialogue on energy
efficiency and all things energy.
Thank you for the opportunity to be here this morning.
[The prepared statement of Ms. Murkowski follows:]
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Mr. Whitfield. Well Senator Murkowski, thanks so much for
your testimony and your continued leadership, and welcome,
Senator Shaheen. We--at this time, I would like to recognize
you for 5 minutes for your opening statement.
STATEMENT OF HON. JEANNE SHAHEEN
Senator Shaheen. Thank you very much, Mr. Chairman, Ranking
Member Rush, and the members of the committee. Thank you for
holding this very important hearing today. I am especially
pleased to be joined by Congressman Waxman, the ranking member
of the full committee, and I was pleased to see Chairman Upton
here as well.
I share the views, I think, of all of you that we have just
heard from that energy efficiency is a win-win-win. We can save
energy, save pollution, we can protect our national security,
and we can also create jobs. And so it is a great place to
start, and it has bipartisan support.
I am also pleased to be joining my former ranking member. I
served for 4 years on the Energy Committee with Senator
Murkowski, and I know what great leadership she has provided on
this issue, as well as so many other energy issues. She pointed
out that with the assistance of this committee, last session we
passed the American Energy Manufacturing Technical Corrections
Act, which is a mouthful, but it included many energy
efficiency provisions, including several from the Shaheen-
Portman legislation that really helped to lay a foundation, I
think, for further discussion about energy efficiency.
I want to talk a little bit about the legislation that
Senator Portman and I have introduced, but I want to begin by
putting it in a little bit of context, as Senator Murkowski
did. I think all of us would agree that we need a comprehensive
national energy policy. We remain overly dependent on foreign
oil. We remain reliant on an outdated energy infrastructure
that harms American businesses and gives our overseas
competitors an advantage. I think we have to utilize a wide
range of energy sources, including natural gas, oil, nuclear,
and renewables, like wind, biomass, and solar to address our
future energy needs, and that this gives us an energy future
that is more stable and gives us a stronger economy.
As you all will highlight in today's hearing, we can't just
talk about the supply side of energy; we also have to talk
about how we consume energy once we have it. Efficiency, as we
all know, is the cheapest, fastest way to deal with our energy
needs and our economy's energy independence.
I wanted to start with a couple of examples that I think
are important as we think about the successes we can achieve
through energy efficiency. One of the most well-known is the
recent makeover of the Empire State Building, which reduced
energy costs by $4.4 million a year. It created 252 jobs, and
it is estimated to have saved 4,000 metric tons of carbon
emissions. They did things like install 6,500 new windows, a
chiller plant retrofit, new building controls, and a web-based
tenant energy management system.
I had the opportunity not too long ago to visit a New
Hampshire company called High Liner Foods, which is in
Portsmouth, on the seacoast of New Hampshire. It is an energy-
intensive seafood processing plant that requires a tremendous
amount of energy to operate. At one point, the 180,000 square
foot facility consumed roughly 2 megawatts of power at any
given time during normal operations. So next to the cost of
personnel and fish, their biggest cost was energy. But by
installing efficient lighting, new boilers, and various demand
response techniques, the company has made great strides in
reducing its energy consumption, which allows them to expand
their business footprint in the State, and be more cost
effective in their production.
We can also benefit from those companies that are producing
energy efficiency technologies. We have a company in New
Hampshire called Warner Power that has made the first
breakthrough in transformers in over 100 years. It is called
the hexaformer, and if we look at the--where we lose power,
about 5 percent of all electricity generated in the United
States is lost through inefficiencies in transformers. So with
wide scale use of this transformer, the company estimates that
1.5 percent of all transformer energy losses could be
eliminated, saving the country 60 terawatts of electricity per
year. Now, you all may know more about terawatts than I do, but
I translate that into five times New Hampshire's annual
electricity consumption, so significant savings.
As Senator Murkowski pointed out, energy efficiency enjoys
diverse support among industry advocates. Because too much of
our debate around energy has been fossil fuels versus
alternatives. It has been about whether we benefit in the
Northeast versus who benefits in the South or the West or
Alaska, and everybody benefits from energy efficiency. It is
one of the great places where we can really come to some common
agreement.
Senator Portman and I have done that over the last couple
of years. We introduced legislation last year. As I pointed
out, some of those provisions were signed into law as part of
the Act. Those provisions required federal--the DOE to utilize
advanced metering tools, the Department of Energy to study and
better understand the barriers to the deployment of industrial
energy efficiency. And we are reintroducing the legislation
this year. It will include provisions around buildings that are
voluntary, not mandatory, but critical because it will provide
incentives, and as we all know, buildings use about 40 percent
of our energy each year. It will assist the manufacturing
sector, which consumes more energy than any other sector of the
U.S. economy, and it will require the Federal Government, as
you all pointed out, the single largest energy user, to adopt
more efficient building standards, smart metering technology,
and Congressman Gardner, I certainly agree. We need to do more
to make sure that people can take advantage of performance
contracting. The bill will have a real measurable benefit to
our economy and our environment. A study by the American
Council for an Energy-Efficient Economy found that last year's
version of the bill would have saved consumers $4 billion by
2020, and helped businesses add 80,000 jobs to the economy. It
would also cut carbon dioxide emissions by the equivalent of
taking five million cars off the road. And in the process, it
would nothave increased the deficit of this country at all.
We passed in the committee last session the Shaheen-Portman
legislation with broad bipartisan support. We had more than 200
endorsements from a wide range of businesses, environmental
groups, think tanks, and trade associations, from the U.S.
Chamber of Commerce to the National Association of
Manufacturers, and the Natural Resources Defense Council, not
usually a coalition that comes together around legislation.
These are the kinds of nontraditional alliances that allowed us
to make progress. I think we have the opportunity working
together, both in a bipartisan way and a bicameral way, to
build on the success of the last session, and to do something
significant around energy efficiency.
I thank this committee very much for the opportunity to be
here, and for the work that you are doing, and look forward to
partnering with you.
[The prepared statement of Ms. Shaheen follows:]
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Mr. Whitfield. Well Senator Shaheen, thanks very much, and
once again, I want to thank both of you for coming over. We
look forward to continuing a dialogue and working with members
of the Senate in coming up with some solutions to these
problems, and we look forward to working with you in the
future. So thank you very much, and good luck in getting back
over to the Senate.
Senator Murkowski. That is the hardest part of our job.
Mr. Whitfield. At this time, I would like to call up the
witness on the second panel, and that is the Honorable Dr.
Kathleen Hogan, who is the Deputy Assistant Secretary for
Energy Efficiency, the Office of Energy Efficiency and
Renewable Energy, at the Department of Energy. So Dr. Hogan, if
you would please step forward?
Dr. Hogan, welcome. Thanks so much for taking time to join
us this morning. Before I introduce you, I just want to make
one comment. You know, we have these hearings and we really
value the testimony that is provided to the committee, and we
do have a rule that we try to follow, being able to receive the
testimony 2 days prior to the hearing, and unfortunately, we
received yours last night around 7:00 p.m. I know that you have
a very busy schedule, but I hope that in the future if you all
testify here, that you might be able to get here a few days
early on this testimony so we have an opportunity to really
look at it.
But thank you for being with us today. We do look forward
to your testimony and your expertise, and I will recognize you
for 5 minutes for your opening statement.
STATEMENT OF HON. DR. KATHLEEN HOGAN, DEPUTY ASSISTANT
SECRETARY FOR ENERGY EFFICIENCY, OFFICE OF ENERGY EFFICIENCY
AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY
Dr. Hogan. Thank you, Chairman Whitfield, Ranking Member
Rush, and members of the subcommittee for inviting me to
testify today on behalf of the Department of Energy. As noted
by many that have spoken already, energy efficiency is a large,
untapped resource in the United States. It offers important
benefits for the country, improved competitiveness, billions in
consumer savings: growth in domestic jobs, greater reliability
of our energy systems, and reduced reliance on foreign oil, as
well as environmental benefits.
This year's State of the Union address included a goal to
cut energy wasted by our homes and businesses by half over the
next 20 years, and to double our energy productivity. The
Department of Energy's energy efficiency portfolio is making
important contributions towards these goals, including helping
to ensure the long-term competitiveness of the United States,
though much more needs to be done. We can start by looking at
our homes and buildings. They consume about 40 percent of U.S.
energy at a cost of about $400 billion a year, and there are
many savings opportunities. DOE R&D has advanced new
technologies, lighting, heating and cooling systems, windows
that offer significant savings. Our work with leading home
builders offers new homes with 50 percent savings over typical
homes, as well as good indoor air quality and durability. We
are working with organizations, and a number of them, on home
upgrade programs to address the large number of existing homes,
most built before modern codes, and these programs offer
savings of 15 to 30 percent. We have recently reached the major
milestone of weatherizing more than a million low income homes
since 2009, helping these families save hundreds of dollars
each year. We have also partnered with over 100 commercial,
industrial, and public sector organizations representing
billions of building square feet, and $2 billion in financing.
They have taken the President's Better Buildings Challenge,
with a goal of saving 20 percent or more on their energy bills
by 2020, and then showcasing for others how to do it. Our
minimum energy conservation standards that we implement now
span more than 60 categories of appliances and equipment, and
are currently saving consumers and businesses tens of billions
of dollars each year. And as we have heard a lot of discussion
this morning, as the Nation's single largest user of energy,
the Federal Government does continue to lead by example. We
have reached large energy savings, water savings, and renewable
energy goals, and are on target to meet the President's
challenge to implement $2 billion in performance-based
contracts by December 2013, investments, as we have heard, that
will reduce our energy use at no cost to the taxpayer.
Turning to manufacturing, we are working on next generation
technologies, processes, and materials that offer substantial
improvements in efficiency, and which will position U.S.
competitively for the future. In the State of the Union
address, President Obama called for a network of manufacturing
institutes that would help address cross-cutting challenges and
help accelerate progress across the country. DOE is a partner
in these efforts, for example, through a new pilot effort on
additive manufacturing in Youngstown, Ohio, and we have
recently announced a new energy innovation hub on critical
materials at Ames Laboratory to develop solutions to domestic
shortages of rare earth materials and other materials critical
to U.S. energy security. We also have a strong track record
with combined heat and power, which now has new market
opportunities with lower cost natural gas, and we are
supporting the President's goal of 40 new gigawatts by 2020.
Finally, DOE manages a diverse transportation research
portfolio that spans many technologies and addresses light duty
passenger cars to heavy duty trucks. Building on past DOE
research successes, the President has launched the EV
Everywhere Grand Challenge to spur American innovation and to
make electric vehicles more affordable and convenient to own
and drive than today's gasoline-powered vehicles within the
next 10 years. Electric vehicles do offer the potential for $1
a gallon gasoline equivalent, as well as a number of consumer
conveniences, and the U.S. needs to continue to lead in this
marketplace.
So we are pleased to be part of meeting these challenges
and contributing to a more secure, resilient, and competitive
energy economy. We look forward to see what more we can do
together with you, and thank you again for the opportunity to
be here today. I am happy to answer any questions.
[The prepared statement of Dr. Hogan follows:]
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Mr. Whitfield. Well, Dr. Hogan, thanks so much for your
comments. We appreciate, as I said, your being here, and I will
recognize myself for 5 minutes of questions.
I know you have a large portfolio of responsibilities, and
certainly one of them does relate to the energy savings
performance contracts. Would I be accurate in saying that part
of your responsibility is working with other agencies of the
Federal Government to encourage them to identify ways to be
more efficient in their areas of responsibility? And do you
know how many existing energy savings performance contracts are
active at this time?
Dr. Hogan. So you are accurate in saying that my portfolio
includes the Federal Energy Management Program that does work
with the other agencies to help them achieve a variety of
energy, water, and renewable energy targets, and to help them
with energy savings performance contracts. Currently, there are
over 250--perhaps 270, 280 performance contracts in place,
driving investment of more than $2.5 billion in building
improvements.
Mr. Whitfield. Right, and my understanding, the private
companies that get these contracts, they provide the financing
for this and the government simply pays it back over time with
a nominal interest charge. Is that correct?
Dr. Hogan. Energy savings, yes. So there is a sort of
shared savings mechanism.
Mr. Whitfield. And generally, how long do these contracts--
what is the repayment terms on the contract, the length of
time?
Dr. Hogan. They can vary based on what is necessary so that
it works for the performance contracting firm. It can be 10,
15, 20 years.
Mr. Whitfield. Well, recently I attended a luncheon, and
there were a large number of company representatives there, and
all of them were uniformly excited about this program and very
optimistic and positive about it. And I left that luncheon
excited myself, because they were talking about all the great
accomplishments they had made. And then, really to my surprise,
about 3 days later, a group of employees at a federal
installation came into my office, and they were complaining
about a contract that had been completed on their installation
and they were talking specifically about some sensor detectors
that did not work right and some impact that it had on boilers,
and it ended up costing a lot more money. And they had to bring
people in on overtime to take care of these problems, and they
ended up even disconnecting some of the systems. And we all
know that you can find something that didn't work correctly,
but generally speaking, what sort of oversight do you have to
ensure that at least those experiences are minimal?
Dr. Hogan. So I have the Federal Energy Management Program
under my purview, and we do work with all the federal agencies
around best practices to be following up with their energy
service contracts. There are best practices for how to do
evaluation, measurement, and verification on what is being
achieved with these contracts, and we are happy to work with
any sort of issues that address and help those agencies work
them through so that we are getting the bang for the buck that
ESPCs have to offer.
Mr. Whitfield. So they can always come back to you all and
say hey, we have got--this is really not working the way it is
supposed to be working.
Dr. Hogan. Absolutely.
Mr. Whitfield. OK. Well, I have no further questions at
this time. Mr. Rush, I will recognize you for 5 minutes of
questioning.
Mr. Rush. I want to thank you, Mr. Chairman, and Secretary
Hogan, it is certainly a pleasure to have you before the
committee again here. I am proud of the many accomplishments
that you have made and that your agency--the Department has
made.
I want to just focus on an area that centers on low income
households. It has been well-established that low income
households pay a disproportionate amount of their paychecks on
energy bills, and many urban constituents, those who live in my
district, the First Congressional District of Chicago--
Illinois, rather, live in older homes and older buildings that
are less energy efficient, and therefore, they are more
expensive in the summer to cool and in the winter to heat. This
leads to higher energy bills, and so my question to you is of
the many programs that President Obama has implemented, many of
his proposals on energy efficiency, I would like to know which
ones do you think that are most important, that will have the
most impact on our urban and low income communities? And so
which one of the programs do you think that would happen?
Dr. Hogan. Well certainly the weatherization assistance
program has had a large impact in lowering the energy bills of
low income households. That is a several-decade old program at
this point that has weatherized six million or so homes over
this period of time, a million or so since the Recovery Act was
put into place, and it is helping these households at this
point save billions of dollars. We are doing a lot with that
program to try and expand its use so it can be more effective
in multi-family housing and engage with the owners of those
buildings that need different mechanisms with which to engage
with the Federal Government. So that has just been a very
powerful program that way.
Mr. Rush. And the public housing-owned apartments, rental
units, do you have any segmentation of the energy costs and are
they--especially in newer public housing developments, are they
meeting energy standards--our higher energy standards? Are you
monitoring those, and what is going to be effective of those
rental units and public housing?
Dr. Hogan. Yes, so newer buildings certainly are meeting
higher efficiency levels than the vast number of the older
buildings that are out there, and we continue to work with HUD
around standards for federally-owned buildings, and work to
continue to engage with building owners of tenant-occupied
space.
Mr. Rush. I have--I think that in order to have a more
vibrant and effective energy policy and energy culture more
into the future, it is important that we frame--it is important
that we introduce--it is important that we teach young people,
even in the early grades of grammar school or grade school, the
importance of energy. Do you see that as being a part of what
you have done and what you plan to do in the future in terms of
working with the school systems across the Nation?
Dr. Hogan. Yes. We have done a number of educational
initiatives with students in schools around energy challenges
and other means so that we can educate people about energy in
the school, energy at home, and create such a culture. I am
happy to engage with you more on those topics.
Mr. Rush. Well, I would like to work with your office to
identify the different types of programs and incentives that
exist for lower income constituents.
Mr. Whitfield. Gentleman's time is expired.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Whitfield. At this time, I recognize the gentleman from
Illinois, Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. I am going--I will be
real brief.
The original mission of the Department of Energy was to
decrease our reliance on imported crude oil. The mission
statement that I pulled up recently has changed a little bit.
There are reports today that we have actually imported more
crude oil from Saudi Arabia over the last month than we have in
the last previous years. So put me down as a skeptic about the
benefits of parts of the Department of Energy.
Having said that, Mr. Chairman, I would like to put into
the record a press release from the National--from the Consumer
Electronics Association and National Cable and
Telecommunications Association--announced today these
companies, Comcast, DirecTV, DISH, Time Warner Cable, Cox,
Verizon, Charter, AT&T, Cablevision, Bright House Networks, and
CenturyLink, and Manufacturers Cisco, Motorola, and EcoStar
Technologies, and Aris, they have come to an agreement to
obviously establish set box--set top boxes that have--are
energy efficient, use the same technology as some of the
electronics, you know, the sleeping modes and stuff. This is an
example of the industry doing it without government assistance
or help. I also believe in the consumers, and I am also
concerned that if we push environmental standards and rules and
regs on the individual homeowners, that folks in the poorer
regions of this country can't afford the more expensive homes
that require new technology, versus homes that they want to
purchase and live in.
So with that, Mr. Chairman----
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Shimkus. And I yield back my time.
Mr. Whitfield. Gentleman yields back his time.
I recognize the gentleman from California, Mr. Waxman, for
5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
Dr. Hogan, I want to ask you some questions about the
national energy efficiency standards for appliances and
equipment, but before I turn to that, I want to briefly discuss
a DOE rulemaking under Section 433 of the Energy Independence
and Security Act. Section 433 requires new and substantially
rebuilt federal buildings to meet strong efficiency performance
standards to reduce the use of energy generated from fossil
fuels. DOE issued a proposed rule in 2010, but it lacks
sufficient detail for stakeholders to evaluate how the
standards would operate in practice.
Last summer, Senator Bingaman and I wrote to Secretary Chu
requesting DOE to issue a supplemental notice of proposed
rulemaking to address issues raised by stakeholders and allow
for additional public comment. Your response indicated
willingness to issue such a proposal, but we have been waiting
since last August.
Dr. Hogan, is DOE committed to issuing a supplemental
proposal for implementing Section 433, and if so, by when?
Dr. Hogan. I am happy to be here to be able to relay that,
indeed, we are committed to issuing a supplemental proposed
rule. We actually do have that supplemental proposed rule at
this point with the Office of Management Budget under review,
which is part of our process before it can be shared with
stakeholders. So if you rolled back the clock just a few weeks,
if you looked at the OMB system, it would have shown that there
was a final rule under review and now it will show that there
is a proposed rule under review.
I think also in the letter that we sent to you, we
indicated that we did understand some of the issues that were
being raised, both by federal agencies and stakeholders, and
things that needed to be reconsidered, such as using renewable
energy credits potentially to meet some of the requirements,
how to define a retrofit or renovation, as well as how to deal
with CHP and those are the types of issues that we will be
addressing in this supplemental notice.
Mr. Waxman. Will this proposal address the concerns
stakeholders have raised regarding how to define major
renovation that potential use of energy credits for compliance
and clarifying the treatment of combined heat and power?
Dr. Hogan. Yes.
Mr. Waxman. Section 433 was intended to reduce carbon
pollution by promoting energy efficiency and renewable energy
in government buildings in a common sense and reasonable
manner. For example, it directs the Secretary to consider
whether there are significant opportunities for substantial
improvements in energy efficiency in determining whether a
renovation is major and subject to the standards. Dr. Hogan,
will you commit to work closely with the stakeholders
throughout the rulemaking process to ensure that the rule is
practical, reasonable, and effective?
Dr. Hogan. Absolutely we will make that commitment.
Mr. Waxman. Thank you. Dr. Hogan, in your testimony you
referenced the tremendous effectiveness of energy efficiency
standards for appliances and equipment. Could you please
elaborate on that?
Dr. Hogan. Sure. So the Department of Energy implements an
appliance standards program. We implement them under
congressional authorization to do so. I think there is always
an interesting conversation around these standards. One of the
ways to look at it is we are typically given authority to
implement these standards when different states are taking
different approaches, which creates a patchwork effect across
the country that is very difficult for manufacturers to deal
with. That is typically when they go to the Congress and ask
for the Department to have such authorities.
Mr. Waxman. Dr. Hogan, as I understand, the Department
implements minimum energy conservation standards for more than
60 categories of appliances and equipment. As a result of these
standards implemented since 1987, energy users are estimated to
have saved tens of billions of dollars on their utility bills
in 2010. Is that right?
Dr. Hogan. That is right. These standards that create a
minimum level for the products that can be sold in this country
are saving tens of billions of dollars.
Mr. Waxman. I understand there are at least five proposed
or final efficiency standards that have been sitting at OMB for
over a year, and I understand that DOE has missed the
rulemaking deadlines for another four standards that have not
yet gone to OMB. I assume this is correct? Am I right?
Dr. Hogan. That is in the ballpark, yes.
Mr. Waxman. Well, it makes no sense. These standards save
money, strengthen our economy, and reduce pollution. I urge the
Administration to move forward and get them finalized.
Thank you so much for your----
Dr. Hogan. Thank you.
Mr. Waxman [continuing]. Participation in the hearing.
Thank you, Mr. Chairman.
Mr. Whitfield. Thank you, Mr. Waxman.
I might just say that in the spirit of all of the above
energy policy, many of us would like to get rid of Section 433,
because it certainly discriminates against area of energy
supply.
At this time, I would like to recognize the gentleman from
Louisiana, the vice chairman, Mr. Scalise, for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
being with us, Ms. Hogan, and you know, as the chairman
referenced, Section 433--and I think the ranking member of the
full committee just was talking about that, too, and the
rulemaking process. Can you tell me what kind of concerns you
all have heard about these supplemental rules being developed?
Dr. Hogan. What we hear is stakeholders are looking for a
fair amount of flexibility in the implementation of the
standards. So some of the questions that have been raised are
around the definition of a major renovation, so what actually
triggers these significant savings requirements, whether or not
you can use renewable energy credits to meet some of these
savings targets, and how it is that CHP would be counted. Those
are the types of issues that we think we can address through a
notice of proposed rule and effectively engage stakeholders in
getting to resolution.
Mr. Scalise. And it is something that concerns a lot of us,
you know, just that section in general, you know, and I think
we will be looking at it some more.
The Federal Government is the largest user of electricity
and fuel in the country, so I would like to know what steps you
are taking to actually go throughout federal agencies and
achieve real efficiencies and savings in the Federal
Government.
Dr. Hogan. So the Federal Government currently is subject
to a number of savings targets, either through congressional
action or through executive orders.
Mr. Scalise. Which ones are actually saving taxpayers
money? I am not talking about objectives and goals down the
road years from now. How are you saving the tax--I mean, when
we came in 2 years ago into the Majority, we said we need to
start controlling spending, because 40 cents of every dollar is
borrowed money, and we started with ourselves. We actually cut
our own budgets here in the House. We cut the budgets for
congressional offices, because we felt like you have to put
your money where your mouth is. So, you know, as you all are
going around telling everybody else to change their lifestyles,
what kind of things are you doing within the Federal Government
to save taxpayers money in terms of----
Dr. Hogan. Sure. So take energy, the energy intensity of
the Federal Government has been reduced by approximately 15
percent over the last 10 years or more. Also on water savings,
we are meeting significant savings targets there as well. Both
of those lead to substantial dollar savings across the federal
fleet.
Mr. Scalise. I think a lot of us would say if you just, you
know, turned out all the lights over at, you know, some of
these agencies that are putting radical regulations in place
that are costing us jobs and making families have to pay more
for food and for electricity and for gasoline, you would
probably not only become more efficient, you would help
families and get this economy moving again.
I just throw one suggestion out there as we are talking
about efficiency, you know, the President today and every day
for the last couple of days has sequesters going around. He has
been flying around on Air Force One all around the country,
trying to scare people about the effects, many of which are not
even accurate on this sequester. I think you could probably be
a lot more efficient, you might want to call the White House to
tell him, just park Air Force One. I mapped it out. It is only
less than 2 miles for the President just to drive right down
here to the Capitol and sit down and let us work this thing out
instead of flying all around the country, tens of thousands of
miles, and using who knows how much fuel. You know, just park
Air Force One and go the maybe 2 miles down here and just sit
around a table and figure this thing out. But that might be a
way to save a lot of energy. I am not sure if you want to pass
that on to the White House. It might be a good idea.
With that, I yield back the balance of my time, Mr.
Chairman.
Mr. Whitfield. Thank you, Mr. Scalise.
At this time, I recognize the gentleman from California,
Mr. McNerney, for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman, and I appreciate
your opinion on that, Mr. Scalise.
I thank you, Dr. Hogan, for coming and testifying today,
and for your hard work in the Department. I just have a
question about rate of return. What--do you have sort of an
average rate of return a household might experience by
investing in energy efficiency technology? How many years would
it take back--to pay back a $5,000 investment in new windows or
something like that, if it is just taking out of energy
savings?
Dr. Hogan. Yes, so every home can be a little bit
different, but I think there is a fair number of improvements
somebody in their home can make that can have a payback of 3,
4, 5, 6, 7 years.
Mr. McNerney. So--and that is not including federal
subsidies, or is that including?
Dr. Hogan. That would be without any type of subsidies.
That would just be based on doing insulation, windows, a more
efficient furnace, et cetera.
Mr. McNerney. So the homes in lower income areas are going
to be less efficient than the new homes in the more affluent
areas, so they would have quicker rate of return, perhaps, than
the newer homes, so federal help in that would be very
effective in terms of reducing energy use and saving people
money?
Dr. Hogan. Yes, I think people use incentives for any
number of reasons. One is to help buy down the cost of these
improvements, but also, as we know from utility programs around
the country, you use some incentives just to even get people's
attention, just to help get those improvements moving.
Mr. McNerney. Thank you. I was very thrilled to hear you
talk about water savings. You know, I am from California and we
have water wars out there, and water savings is a double win,
because you are not only saving water, but you are saving
energy because so much energy is needed to produce and deliver
water. Are there significant programs in place to incentivize
western users, particularly in southern California, to save
water?
Dr. Hogan. We can look into that and get back. Certainly
not at the federal level, but there is certainly the issues
with water in California are being addressed by a number of the
California agencies, and I know they are trying to put programs
in place very similar to what the energy utilities have been
doing for years.
Mr. McNerney. OK, one more area of questioning. Again, I
was thrilled to hear you talk about electric vehicles, but I
have heard some concern about companies installing equipment
that might service all kinds of vehicles. Are you working with
companies to address potential concerns of these businesses for
installing stations that can accommodate all vehicles? What is
the plan in terms of getting this out there in the business
world?
Dr. Hogan. Yes, so we are trying to engage with
organizations of all kinds around building out the right
infrastructure around alternative vehicles. We have a Clean
Cities Program that works with cities around, you know, helping
them plan for the right infrastructure and build it out based
on sort of what makes sense in their regions, and want to be
doing this in as an efficient and effective a way as possible.
Mr. McNerney. So we are moving forward aggressively in
that?
Dr. Hogan. Yes.
Mr. McNerney. And I think the new automobile efficiency
standards are going to go a long ways in terms of getting us to
use less fuel, and I applaud your efforts on that.
Dr. Hogan. Thank you.
Mr. McNerney. Thank you. With that, I yield back, Mr.
Chairman.
Mr. Whitfield. Thank you very much.
At this time, I recognize the gentleman from Texas, Dr.
Burgess, for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman. I appreciate you
having the hearing, appreciate the opportunity to hear from the
Department of Energy.
Let me just say for the record, I am a big believer in
energy efficiency. I do think that is the low-hanging fruit. I
think that is the common ground that where certainly we can
meet on many of these issues. Every July, I do an energy
efficiency summit in the district back home in Texas. We have
had speakers as diversified as David Porter for the Texas
Railroad Commission to James Woolsey, the former Director of
the CIA. I have tried to construct things in my life around
energy efficiency, the home we live in, the hybrid car that I
drive. So I am a believer in energy efficiency. I made those
decisions based upon what was right for me and my family, not
based on anything that the Federal Government told me to do.
But since you are here, let me ask you a question. The
number one question everyone in my district is asking is why
are gas prices so high right now? Gasoline prices.
Dr. Hogan. I guess it is based on the cost of production
and the cost of moving it through our systems.
Mr. Burgess. Well, if you are in the Department of Energy,
presumably you have these discussions, correct?
Dr. Hogan. The Department of Energy does have discussions
about what we can do in the short term and in the long term to
address gas prices. I think in the short term what we can do is
really give people tips about how to use the gasoline that they
are using as efficiently as possible, and then in the longer
term, we can clearly be figuring out how to increase low-cost
supply, as well as use alternative fuel vehicles and further
development in that space.
Mr. Burgess. Well, it is of concern that here we are in
February, and back home in Texas right before I came up here, I
filled up the hybrid with gasoline that cost $3.70 a gallon in
Texas in February. That means in New York, after Memorial Day,
they will be closing in on $5 a gallon gasoline. So I think
this is a matter of some importance, and since the Department
of Energy is involved in this, and this may have a direct
effect on our economy generally. No one can forget that just
before the meltdown that occurred in 2008, our gasoline prices
and diesel prices were sky high, and they certainly had an
effect on the economy, so I would think this would be something
that you would be discussing internally and maybe even some
interagency discussions. Do you ever pick up the phone and call
the people at the Commodities Futures Trading Commission?
Dr. Hogan. We do engage in conversations across the Federal
Government, and we, of course, are very concerned about these
prices and are doing what we can do at this point, yes.
Mr. Burgess. What does Mr. Ginsler at CFTC tell you that he
is doing that may dovetail with what you are doing with the
energy efficiency in the Department of Energy?
Dr. Hogan. We can give you a more detailed explanation, if
you would like, on what the Federal Government is doing in
this----
Mr. Burgess. I would appreciate that very much, and again,
I think that would be of general interest to people who are
maybe watching this on C-SPAN.
Now, in answer to--or actually, Mr. Waxman made a point
about that he wanted to see things that were common sense
directions and applied in a reasonable manner, and I think he
was talking about the Federal Energy Management Program. So you
have the jurisdiction of federal buildings under your control,
the energy efficiency of federal buildings? Is that correct?
Dr. Hogan. That is correct.
Mr. Burgess. Is this building under your control?
Dr. Hogan. I believe this is under the Office of the
Architect of the Capitol.
Mr. Burgess. But you know, I will just say from my
observation, having been in the congressional office buildings
now for a few years, since 2007, 2008. Someone came in and
changed all my light bulbs to CFLs. Nobody told me they were
going to do it. Nobody warned me not to break one over my head
one night, but there I was. I had CFLs in all the offices.
Well, that is great. We are perhaps saving some energy by doing
that, but no one has ever done, as far as I can tell, an energy
audit of the Rayburn Building and discussed the effect of
having single-pane glass on all of the windows. I have an
office that faces west. In the summertime, it gets beastly hot.
Is this something that your office might be interested in?
Dr. Hogan. We are happy to have a conversation about how to
do an audit of the Capitol buildings----
Mr. Burgess. Well, I am just shocked that the architect of
the Capitol has not reached to you, as part of your mission is
for the energy efficiency of federal buildings, and this is a
big federal building that consumes a lot of energy. You changed
all the light bulbs, but maybe there were other things you
should have been looking at as well.
Dr. Hogan. Well I think if we engage the Office of the
Architect, we will see that they are doing a lot more around
the Capitol buildings, and probably just started with, as we
were saying, the low-hanging fruit, and certainly doing those
audits is a cornerstone of what we are doing across the entire
federal family.
Mr. Burgess. So can I assume that there are conversations
between your office and the Office of the Architect of the
Capitol as far as the energy efficiency of--the energy
consumption of federal buildings, at least on the House side?
Dr. Hogan. We have been engaged with the Office of the
Architect in their plans, yes.
Mr. Whitfield. Gentleman's time is expired.
Mr. Burgess. Well, Mr. Chairman, maybe if you could share
some of that information with our office as well. We would
appreciate that.
Mr. Whitfield. OK.
Mr. Burgess. Thank you, and I will yield back.
Mr. Whitfield. At this time, I recognize the gentleman from
New York, Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Dr. Hogan, welcome, and I have a couple of questions about
combined heat and power, and the President's 2012 Executive
Order on industrial energy efficiency.
What role do you see for the--is the federal procurement
going to play in achieving the President's goals of deploying
more combined heat and power systems?
Dr. Hogan. So certainly as the largest energy user and as a
big procurer of equipment, the Federal Government has a big
role to play, and we are currently trying to put together a
broader strategy on what that role could look like. Though what
we are doing in the immediate term is exploring extending a
pilot program that we have underway in the ESPC space. We have
been standing up a pilot program called ENABLE to allow the
ESCOs to engage in the smaller buildings that are within the
federal family that typically get overlooked, and we are
looking to expand that ENABLE pilot to encourage combined heat
and power or allow investments in a performance contracting
way.
Mr. Tonko. Thank you, and as part of the effort to identify
policy or regulatory barriers to investing in CHP, the
Executive Order states that federal agencies will convene
stakeholders to solicit their ideas and input. Is DOE involved
in that list of agencies?
Dr. Hogan. Yes, if I am thinking about the same. So the
Executive Order encouraged us to go out and engage any number
of stakeholders around how to advance CHP. We are having a set
of regional dialogues on this topic, the next one in a couple
of weeks in Baltimore, around the things that we can do, and
then we are also engaging in a report to Congress that was part
of the energy bill passed this past December to do a much more
detailed analysis around the barriers in the way of CHP and the
things we can do to remove them.
Mr. Tonko. I know that back in--I think it was '98, a
roadmap was developed to take the--to double CHP from, what was
it, 46 gigawatts to 92, in that neighborhood----
Dr. Hogan. Yes.
Mr. Tonko [continuing]. And they somewhat met that goal,
that target deadline. Where do you believe the best
opportunities exist today for deployment of CHP?
Dr. Hogan. I think we are at a very interesting point right
now for CHP in that there are many, many, many opportunities,
from large heat process type industries to smaller industries
and into the residential and commercial sectors. I think you
will hear from another panel member today on this topic, but I
think also as we look at the post-Sandy period of time, there
is a lot more interest in things that offer enhanced energy
security linked to stave off the aftermath of these storms.
Mr. Tonko. And in the midst of all of that, do you see a
particular industrial sector that might be targeted for best
retrofitting to CHP?
Dr. Hogan. So the industrial sectors that make the greatest
sense are ones that have some amount of heat load, so again,
that can be pretty broad.
Mr. Tonko. In the efforts of the State of the Union for the
race to the top for energy efficiency, how is that going to be
developed? I am asking that from my perspective in the State of
New York, which has been rather aggressive about doing energy
efficiency. Do we get impacted for being a progressive State in
regard to a baseline that might be well in advance of other
States? How would we fare in that whole race to the top?
Dr. Hogan. So we will be happy to engage stakeholders in a
conversation about how this program will be designed. At this
point, the next point when there will be more information about
this program will be in the rollout of the President's budget,
and then after that we will be happy to engage with you more
directly.
Mr. Tonko. I would just indicate a concern there that if
you have done great work, you ought to be rewarded for that and
continue to do more, and the consumers should not be held back
or impacted--negatively impacted because of it.
I am just about out of time. I was going to go into
weatherization, but then let me just make a pitch for
weatherization activities. Even though the stimulus did a great
deal of investment to the good, I believe there is a lot of
unfinished business and would strongly encourage that
opportunity. Thank you very much.
Mr. Whitfield. At this time, I recognize the gentleman from
Nebraska, Mr. Terry, for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman, and thank you for being
here today.
What is the biggest barrier to an increased use of the
energy savings performance contracts by the Federal Government?
The barriers that are of concern?
Dr. Hogan. I think one of the barriers is really just
getting over the hurdle of having many different agencies go
down this path. It takes a fair amount of knowledge to go and
do that, and that is what the Federal Energy Management Program
is set up to do. But just because we offer those services
doesn't mean people necessarily want them. And again, it is
just because everybody is doing so much in their day-to-day
jobs. And I think that is one of the barriers that the
President's Performance Contracting Challenge is really helping
overcome. Challenging the agencies to commit to $2 billion with
energy savings performance contracting means each agency has
its own goal and each agency is working through a set of
projects to meet those goals. So I think we will have largely
addressed that particular barrier by December 2013.
Mr. Terry. All right. On weatherization, you may have read
some stories from my district where there were several million
dollars issued for weatherization in the city, and it was
something like 14 or 15 homes that were actually provided the
services. But yet, the money is gone. And so weatherization, at
least in our area, is not a program that is held in high
esteem. It is an example of the waste and fraud.
So could you point out the internal DOE structure to
oversee the weatherization program and to ensure that 80
percent of it, the dollars that are provided, aren't being used
for administrative purposes?
Dr. Hogan. Sure. First let me say that issues with
weatherization really were the exception and not the rule, and
there is a very comprehensive set of quality assurance
procedures in place, on top of the fact that only a certain
portion of the dollars can be used for administrative purposes.
Mr. Terry. And what percentage is that?
Dr. Hogan. I think it is about 20 percent.
Mr. Terry. Twenty percent is allowed for administrative
purposes----
Dr. Hogan. In all.
Mr. Terry [continuing]. And then the rest has to----
Dr. Hogan. Be put to work to improve low-income family
homes. So yes.
Mr. Terry. And so when--how would--there were several
stories in our local paper outing this scam. Do those rise up
to--in DOE, do people catch those so you can begin an
investigation, and how is an investigation into that type of
waste and fraud--well, what triggers an investigation? Can you
investigate that?
Dr. Hogan. Absolutely we can investigate that. Any time we
hear of an issue, it is investigated and we do everything in
our power to correct it and recoup any dollars that may have
been misused.
Mr. Terry. Will you check for me and get back to me with
what you have done on the Omaha situation with the waste and
fraud in that program?
Dr. Hogan. We would be happy to do that.
Mr. Terry. Thank you. Yield back.
Mr. Whitfield. Thank you, Mr. Terry.
At this time, I recognize the gentlelady from California,
Ms. Matsui, for 5 minutes.
Ms. Matsui. Thank you very much, Mr. Chairman. Thank you,
Dr. Hogan, for being here.
Energy efficiency is a key component for shifting our
Nation towards a clean energy economy. We have made great
progress in changing the way we use and conserve energy, but we
need to do much more. I believe one area where we can make a
significant impact is by providing sound financing mechanisms
to individuals eager to make energy efficiency upgrades to
their home. In fact, last fall in my district of Sacramento, we
launched a revamped public-private partnership born out of the
Recovery Act funds to encourage residential energy upgrades.
The demand for residential energy retrofits is strong.
Property Assessed Clean Energy, or PACE programs, are one
approach to financing home retrofits. With PACE, homeowners can
finance energy efficiency improvements without an upfront cost
through a voluntary assessment on their property.
Unfortunately, PACE programs have faced some major hurdles.
Dr. Hogan, does DOE support innovative financing mechanisms
that would help homeowners make these important upgrades?
Dr. Hogan. Yes, through our work at the Department of
Energy, we are very supportive of innovative financing
mechanisms and doing everything that we can to help pull out
the lessons learned and share them with others, as well as
working to help States and local governments continue to
leverage and improve the effectiveness of the revolving loan
funds that they were able to stand up with Recovery Act
dollars.
Ms. Matsui. OK, now is there a way to get PACE programs
back on track through administrative means? Are you or the
White House still engaging FHFA to restore this program?
Dr. Hogan. I think what we have all heard from FHA is FHA
would like more data to better understand how these loans
perform, and so the Department of Energy is actively engaged in
working with others to try and pull together the type of data
that the finance industry needs to understand this loan
performance.
Ms. Matsui. So you are looking at probably similar
approaches to facilitate this growing demand?
Dr. Hogan. Exactly.
Ms. Matsui. OK, great.
Dr. Hogan, some have suggested that we don't need
government policies to boost energy efficiency. They say that
if customers really wanted energy efficiency, the market will
supply it. But my understanding is that there are a lot of
market failures in this area. The classic example is the
situation where the landlord has no incentive to weatherize an
apartment because a tenant pays the utility bills. Dr. Hogan,
could you please discuss some of the market failures that allow
energy waste to persist, even when it could be cost effective
to deploy efficiency measures, and are these market failures
significant?
Dr. Hogan. I think we can see from the opportunity that we
all talk about over and over with energy efficiency that there
is a list of market barriers that hinder people from making
what might be the economically rational choice, and that can
just be that some of the more efficient products do cost a
little bit more up front, even if they have a very attractive
payback associated with them. And some of it is just hard to
get the information so that you know what that payback would
look like. So those are the types of things around which
policies can be very helpful in helping people get these
savings.
Ms. Matsui. Could you explain further on that what the
policies might be?
Dr. Hogan. Better information and clearly, the reason we do
appliance standards as well is because we can help consumers
get the savings that are there from the more efficient products
whenever there is a cost effective opportunity to do so.
Ms. Matsui. OK. I just also want to follow up on what my
colleague from New York has talked about, about the race to the
top for efficiency. You know, California has been involved in
this a long time, since the '70s with the grandfather of energy
efficiency, Art Rosenfeld, and so we don't want to be, in a
sense, starting from baseline, which is artificial in a sense,
so we would love to have that discussion with you.
I have no further questions, so I yield the balance of my
time.
Mr. Whitfield. Thank you very much. At this time, I
recognize the gentleman from Louisiana, Dr. Cassidy, for 5
minutes.
Mr. Cassidy. I am going to defer to my gentleman--my
colleague from Texas for a turn, please.
Mr. Whitfield. Gentleman from Texas is recognized.
Mr. Olson. I than the chair, and good morning, Dr. Hogan.
Welcome. I appreciate your time and expertise.
One of the instances where energy is lost, regardless of
the initial source, is in transmission. The wires we use are
largely copper. They lose significant amounts of energy as they
travel from place to place. Many people may not realize this
because Texas is the number one producer of oil and gas, but we
are the number one producer of wind in America. The problem
with our wind is it is generated in the panhandle in western
Texas. We need it in eastern Texas, Houston, Dallas, Ft. Worth,
San Antonio, Austin--in some cases, 700 miles away. But
University of Houston is trying to change that. Having recently
been named a Tier I research university and being led by an
innovative and hands-on chancellor, Dr. Randy Coture, U of H
has created an energy research park. One project that they are
doing at the University of Houston energy research park is
working on superconducting wires that are up to 20 percent more
efficient than current wires. This is not just an academic
project. U of H intends to prove this works by rewiring their
main campus with these superconducting wires. In true Texas
tradition, they are going all in, putting their future--and
more importantly, the future of over 300,000 students--on the
line. Are you aware of this project being developed at the
University of Houston energy research park?
Dr. Hogan. I personally am not, but it certainly does sound
very exciting.
Mr. Olson. Well since you are not familiar with it, I would
like to offer you a chance to come down and see it. I mean, if
you have got some time, we go right here to Reagan
International Airport, have a direct shot on United Airlines to
Intercontinental Airport down in Houston. I would love to take
you down there and see the energy research park.
Dr. Hogan. We would be very interested.
Mr. Olson. Earlier today I had a meeting with the people
from ABS, which is the American Bureau of Shipping. One energy
efficiency they are looking at is natural gas, in fact, liquid
natural gas for transports of maritime vehicles. In fact,
Nasco, the shipbuilder, is actually building their first
project where one of the big ships will be powered by LNG,
going to the Caribbean area and that part of the country. What
do you think about that issue for energy efficiency, natural
gas as opposed to traditional fossil fuels?
Dr. Hogan. Certainly we can have a conversation about that
as well.
Mr. Olson. OK. Well one further question for you, ma'am. I
mean, again, our biggest challenge right now--one thing we have
in west Texas as well, getting to the Defense Department, they
are being very innovative with their energy resources, their
needs. Fort Bliss in El Paso, the largest base--the largest
geographic base in America, is actually doing great things with
solar because they have the sun out there. In fact, they are
hoping to be actually a net exporter some time, getting energy
off the base and helping local communities. I mean, that is one
example of what the Federal Government can do, but again, my
biggest concern, what I am hearing from back home, is let the
market decide what the technology is. Don't enforce some sort
of technology from--so I ask your assistance going forward.
Listen to the market and help us get this superconducting
technology going on. Come on down and see it. I would really
appreciate it.
Dr. Hogan. Terrific.
Mr. Olson. Thank you. Yield back the balance of my time.
Mr. Whitfield. At this time, I recognize the gentlelady
from Florida, Ms. Castor, for 5 minutes.
Ms. Castor. Thank you, Mr. Chairman, and welcome. Secretary
Hogan. Thank you for meeting with me a couple of months ago to
advise on all the great things that are going on with energy
efficiency. I think there is so much more to do all across the
country for families and businesses, so I encourage you to keep
at it, and we can unleash the powers of American ingenuity and
really empower families and businesses, and save money at the
same time.
I also wanted to thank you for your attention to the
historic investments under weatherization. Under the Recovery
Act, I think you said we were able to weatherize one million
homes. And let me tell you what that means in my area, in the
Tampa Bay area in Florida. That means that thousands of the
folks that I represent are saving money on their energy bills,
while at the same time, we created a lot of jobs. We created a
lot of jobs in a time when the unemployment rate was really
hurting families, and the legacy it has left is very important.
Now our community colleges, with that investment, have ongoing
weatherization training initiatives. They are still creating
jobs, even though the money, the investments from the Recovery
Act have tapered off. For families that struggle to get by, if
they are able to save a few hundred dollars or a thousand
dollars a year on their electric bill, that is very meaningful
to them. That means they can do better at the grocery store,
they can do better with other bills that come in. So thank you
for your attention to that.
Is all of the investments under the Recovery Act for
weatherization, is that all invested now, or are States across
the country still rolling out any of those monies?
Dr. Hogan. The vast majority of the Recovery Act dollars
for weatherization is now spent, so yes, it is----
Ms. Castor. And what is the status of ongoing
weatherization efforts?
Dr. Hogan. That is a good question. Right now, given the
continuing resolution that we are now under, we are working
hard to give the States the information they need to go into
their next program. It is a little bit complicated because of
the continuing resolution which continues the weatherization
budget at a level well below where it had been historically----
Ms. Castor. It is just such a huge payback for the federal
dollars that we can invest back home in our local communities
that save our constituents money, so that money comes back to
them, then we create jobs, and we are still kind of stuck at
this 7.9 unemployment rate, and it is just difficult to watch
the Congress self-inflict a wound and set us back at a time
when the economy is getting better and I see great improvements
and people are hiring.
So we--that is our responsibility here, and I encourage my
colleagues to think about that as these indiscriminate across-
the-board cuts--this is an area that we should continue to
invest in, because it has paid such great dividends across the
country.
And for my colleagues that worry about gas prices, I have
to say, we are fortunate to be living through a time when we
have made such progress in fuel economy for our vehicles. You
know, I have a member of the family that bought--is leasing one
of those electric vehicles. Since October, he has not visited a
gas station. He has not purchased gas. I know my friends from
Louisiana and the gas producing areas, they probably don't like
that, but you know how much money that is saving and how much
that is saving families across the country? This is remarkable
progress. It is saving consumers money. If you can buy a fuel-
efficient vehicle, on average, that means that $1,700 back in
the pocket of consumers where they can spend it on their
families or their small businesses. It helps with climate
change because the carbon dioxide from burning gasoline and
diesel contributes to the--to global warming and changes in the
climate. It is reducing our oil dependence costs. Dependence on
oil makes us vulnerable to oil market manipulation and price
shocks. It increases energy sustainability. Oil is a non-
renewable resource, and we cannot sustain our current rate of
use indefinitely. So using it wisely and conserving is,
frankly, just smart.
Looking ahead, what are the challenges you see with fuel
economy and lengthening the life of the batteries of these
vehicles, and what are you optimistic about?
Dr. Hogan. I think we are very optimistic about what we can
do across a whole set of vehicle technologies. Certainly I
already spoke to the new research effort around electric
vehicles and what we can do there to make them much more cost
competitive over the next 10 years, as well as convenient from
the standpoint of the consumer, and then, of course, make
available something along the lines of a dollar per gallon
gasoline through electricity.
I think we are also interested in what we can do with
advanced combustion. We are doing a lot more there as well, and
we think we will be very well-positioned to be working with
U.S. auto manufacturers to meet the CAFE AE1 standards as they
continue to ramp up in the coming years.
Mr. Whitfield. The gentlelady's time is expired.
At this time, I recognize the gentleman from Louisiana--oh,
Mr. McKinley from West Virginia for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman, and thank you for
your patience, Dr. Hogan.
Let us just start by saying I am very supportive of all the
initiatives on energy efficiency, and as one of just two
engineers in Congress, it is a delight to be able to try to
work and improve that a little further.
But I have got two questions for you. The GAO came out 2
years ago with a report that said there are 11 agencies
handling green buildings or 11 agencies offering 94 separate
initiatives, and they said that--by their own report, they are
saying that we can benefit with more collaboration. Can you
share with us briefly what you have accomplished over the last
2 years in either combining them, because with budget
constraints right now, wouldn't it make more sense instead of
having 11 agencies handling green buildings to just a handful
or fewer? Have you accomplished any of that?
Dr. Hogan. Yes, we are doing a lot of coordination across
the federal agencies----
Mr. McKinley. Different than what you were prior to 2 years
ago?
Dr. Hogan. We are. I think we are getting more and more
efficient as we go forward. I would also say, just going back
to that GAO study, when you just count things it makes it look
like there may be more duplication overlap than there may
actually be, because I oversee the Federal Energy Management
Program, which has an important role in engaging with each of
the agencies with their senior sustainability officials around
their work.
Mr. McKinley. Could you get back to me, please, with some
of the--what you have done to help consolidate, so that we can
use the money--instead of doing it administratively, wouldn't
it make more sense if we could pass that on to the consumers in
some fashion by reducing those costs at the Federal Government
level?
The second issue I have is a bit of a paradox. Someone at
my former firm--we designed a lot of schools and a lot of
public buildings, and we knew that often what the cost was for
operation of an older building, because they didn't meet all
the new standards, the air quality and/or air quality
standards. There was a cost that you can assume in the
operation, but now under the new standards, new buildings are
typically--for operational costs are increasing in costs
primarily because of the standards that are set for fresh air
to come into a classroom where you have to have four to twelve
air changes per minute--per hour, as compared to where it had
been before where we had--maybe sometimes where you had an
individual unit, they would close the damper and there was no
fresh air coming into Johnny's classroom. So now we are
introducing that. So we have a paradox. We are trying to
improve our air quality and efficiency, but we are increasing
costs to the consumer. How do you--how are you dealing with
that?
Dr. Hogan. We certainly understand that issue and we are
working to make sure that we are looking holistically at the
costs for these buildings. Certainly we want to be promoting
technology that meets our national objectives, but in a way
that also keeps the costs in a good space for the people that
have to pay those bills, and really offer the savings that are
there to be gotten. So we are looking at the O&M costs.
Mr. McKinley. You do recognize, then, that the new
standards--and I subscribe to them. I am in agreement with them
because they are improving our indoor air quality, but they are
raising the cost of operation.
Dr. Hogan. When you need mechanical ventilation there is a
cost there, but I think when you look across everything that is
going on in these buildings, you see that that can be done in a
very low cost way. So you are delivering a much more lowe-cost
building for people to be living in.
Mr. McKinley. Do you see--with these standards, do you
accept--I guess I am building back off that same premise,
because I am glad we are providing fresher air into that, but
do you acknowledge that perhaps the old buildings--in some of
these buildings, the indoor air quality wasn't as good as it is
today by what we are doing, by bringing in fresh air?
Dr. Hogan. I think that is a complicated question that
requires a longer conversation.
Mr. McKinley. Stop by. I am over in Cannon. Let us see if
we can't follow up with that, because I think we have a dilemma
here in Congress about indoor air quality versus outdoor air
quality, and I would like to make sure we have a good
discussion about that so when those asthma attacks that people
refer to often perhaps are being caused by our indoor air
quality and the fact that we are not adhering to the various
codes and standards that have been set forth. So if you could
please stop, I would like to do that very much.
Thank you very much. I yield back my time.
Mr. Whitfield. Gentleman's time is expired.
Mr. Griffith, do you have any questions? Mr. Gardner? Dr.
Cassidy? Dr. Cassidy is recognized for 5 minutes.
Mr. Cassidy. Good afternoon.
Young families want the most square footage they can get in
the place with the best school district. For them to invest in
energy saving things which have only a payoff over 10 years
really defeats that purpose, and so the way they are trying to
scrape money together, how can I get the best square footage in
the best school district if I invest $3,000 in which the payoff
is only over 10 years, that is that many fewer square feet I
can purchase. Does that make sense? You look quizzical, so I am
not sure I am being clear.
Dr. Hogan. I understand what you are saying.
Mr. Cassidy. So really if we are talking about market
mechanisms, it seems like much of what we discuss almost is by
fiat, almost by definition, because really under the current
way we finance mortgages, that family, again, has to make that
tradeoff, less square footage or not as good a school district
in order to have some of these things which we all agree would
be wise for energy efficiency. Again, does that make sense?
Dr. Hogan. Yes, I think the way we have been looking at
some of these home purchases is through the total cost of
ownership, so if you look at the cost of a mortgage plus the
cost of the energy bill----
Mr. Cassidy. Now that, though, right now--we have
investigated this. The cost of energy bill is not currently
used by mortgage underwriters in terms of discerning someone's
ability to get a mortgage. So when you look at it, is that
really impacting that young family with three kids trying to
get the better home sort of thing?
Dr. Hogan. Yes, there is an issue as to where that young
family is and how large a mortgage they can get and whether
they are at that maximum level of a mortgage. But I think what
we have seen in recent years is that hasn't been the biggest
barrier.
Mr. Cassidy. Now, I will tell you, when I saw--this came to
mind last year because of Senators Isaacson and Bennet put
forward their SAVE Act, we have been thinking the same concept,
but when I spoke to bankers, they really do not include the
energy cost in a mortgage, or somebody's suitability. Frankly,
we can't talk about market mechanisms until we address this if
we are thinking of that young family. Would you concede that,
and if so, how do we proceed?
Dr. Hogan. Well I think we can proceed in a number of ways.
One is let us continue to have the conversation on the role of
energy bills, because certainly a lower energy bill does give a
household more money to spend----
Mr. Cassidy. But again, if the payoff is 10 years for that
energy saving intervention, really, that family doesn't look at
that 10-year savings. Does that make sense?
Dr. Hogan. You mean because it is----
Mr. Cassidy. They are on a cash flow basis. It is not as if
they have got a lot of money in the bank that they can invest
and see the payoff over 10 years. They are just now meeting
their bills, and anything that pays off over 10 years is
probably not uppermost in their mind.
Dr. Hogan. There is the standpoint from the family. There
is the standpoint from the banker, right, but from the
standpoint of the family, if you have a more efficient home and
you had to pay a little bit extra and it is rolled into your
mortgage, as an example----
Mr. Cassidy. Yes, but that doesn't occur right now.
Dr. Hogan. But it can. Those mortgages are available.
Energy efficient mortgages are available. Part of it is an
access and awareness issue as opposed to----
Mr. Cassidy. I would love to see that, because when I spoke
to the bankers--we had some people come in because we were
pursuing this--and the bankers said listen, we have a
proprietary mechanism by which we determine if somebody is
eligible--it is proprietary to our bank, not industry-wide, and
we do not include this and we are not quite sure how.
Dr. Hogan. OK.
Mr. Cassidy. So if you have those, we would love it if you
could see that.
Do you have awareness of Isaacson and Bennet's SAVE Act?
Dr. Hogan. I do.
Mr. Cassidy. What are your thoughts about that?
Dr. Hogan. I think in general we are very supportive of the
goals of the proposals that can help motivate home
improvements.
Mr. Cassidy. So let me just switch subjects. When I speak
to home builders, they look at the regulations put out by DOE
and they feel that sometimes something that is proscribed for
one place wouldn't apply in another. And little things, for
example, in my State, in Louisiana, if you plant an oak tree on
the west or south side, frankly, you will get a heck of a lot
of benefit, but there is no kind of calculation in terms of
that, in terms of the overall cost efficiency of a home. Their
suggestion was that you bring in stakeholders coming up with
metrics so that someone could pick and choose, saying listen,
insulation really works well here. It is worth bang for the
buck, and this other intervention cost me a heck of a lot of
money, but I am not going to get a payoff for 20 years.
Probably I will have sold the home by then. Any possibility of
that sort of thing?
Dr. Hogan. I think there is a robust conversation ongoing
through the codes organizations about a more performance-based
path to get to an outcome in the least costly way. I think
people are always interested----
Mr. Cassidy. So they feel as if your DOE regulations,
though, are not outcomes based but rather they are sort of you
put in this amount of foam and this amount of this, and their
criticism--and I have learned to say what I have been told, not
what I know, so Dr. Hogan, you may say oh my gosh, you are
totally wrong on this, but their criticism is that your
standards are less performance-based and more ``you shall put
in 6 inches of foam'' sort of thing.
Dr. Hogan. And both pathways are there. There are
performance-based provisions in the codes. I wouldn't quite
call them our codes. These are codes that are created by model
code authorities and the Department of Energy's role has been
to do an energy savings determination relative to those codes
to show that they do offer meaningful savings over the prior
code, so they are a stakeholder-driven process to which the
Department of Energy will also bring technical information to
the table for consideration, which is why there is an ongoing
venue through which we can have all of these conversations.
Mr. Cassidy. Thank you. Thank you, and I yield back.
Mr. Whitfield. Gentleman's time is expired.
At this time, I am going to recognize the gentleman from
New Hampshire as a valuable member of the Energy and Commerce
Committee. He doesn't happen to serve on the Energy and Power
Subcommittee, and so he has waited patiently until the end, and
now he is recognized for 5 minutes for questions.
Mr. Welch. Mr. Chairman, I thank you very much, Mr. Ranking
Member. By the way, having this hearing on efficiency this
early in our congressional term is tremendous, so I want to
thank you and I think all of do.
In listening to this and talking to my colleagues, a couple
of things. Number one, there does seem to be strong bipartisan
cooperation and leadership on efficiency, and then second,
there is really three questions that this committee has got to
sort through, I think. Number one, what can the government do
on its own. Congressman Gardner and I are really focused on
these energy saving performance contracts, and I want to come
back to this, but that is completely within the ability of
government on its own to do useful things to save the taxpayer
money, and also make a contribution to cleaning up our
environment.
Second, there is a question of what can private citizens
and companies do on their own? And I know Congressman Burgess
has been very much--on his own personal situation, very much
focused on energy efficiency and has some skepticism about
steps that government takes that are either unnecessary or get
in the way. Those are fair questions, and I hope our committee
will ask those so that it ends up that we do is helpful and
doesn't get in the way of what private sector folks can do on
their own.
But then third, there are areas where it is possible for
the private sector and the public sector to cooperate and then
leverage the partnership to be successful. Congressman McKinley
and I are working on efforts to try to provide incentives to
homeowners to be able to do things that otherwise they would
not be able to do.
So this is really just a plea to some extent to our
committee that even though there will be a lot of legitimate
questions raised on a practical level about what is the
government role, what is the private role, what is the
partnership role, I hope we will sort through those questions
to have as the outcome, Mr. Chairman, productive steps that
will allow the taxpayer and a company and the individual to
save money. And this initial hearing is really helping us on
our way.
I do want to talk to you about the energy saving
performance contracts that I mentioned Mr. Gardner and I are
really quite focused on. The President had a goal of $2
billion. I mean, what is better than being able to get a
company to sign up and be paid essentially by sharing in the
savings? How is that coming along, and is it possible, if this
is successful, that reports I hear, that there could be up to
$20 billion in savings that we could expand this effort?
Dr. Hogan. Yes, so this was announced a little over a year
ago, $2 billion, and then each agency took on a goal that adds
up to that $2 billion, and the agencies are moving forward to
put those projects in place and sitting here today, we are on
track to meet that $2 billion savings goal by December 2013,
which indeed is very exciting, and I think that will allow the
agencies to step back and work with the White House to
hopefully come up with a phase two to this effort, but it is
probably a little premature to say what that would look like.
Mr. Welch. And how about the utility performance contracts,
the private sector efforts by our utility companies?
Dr. Hogan. So this challenge by the President included both
ESCOs as well as the utility energy savings contracts, and
those are in this mix as well.
Mr. Welch. OK. Dr. Cassidy has left, but I was listening
very carefully to his concern about performance-based approach.
Vermont does have--I think we are the only State that has an
energy savings utility, and it is because there has been a
sense in Vermont that the best--the cheapest electricity and
the--is the unit of electricity that we don't utilize. But the
performance-based approach does seem to make an awful lot of
sense to the Vermont electricity efficiency utility. How about
to you?
Dr. Hogan. So I think performance-based approaches really
do make sense for all the reasons that people were raising
earlier. You are not trying to pick a technology, you are
trying to get to an outcome. So I think conceptually it really
does make sense.
I think the flip side of it is when builders are building a
home, a lot of them say we just want to know what to do in this
region that is going to meet that performance-based approach.
They don't want to be doing detailed----
Mr. Welch. So you would be glad to work with the committee
or folks like Dr. Cassidy to focus on that performance-based
outcome?
Dr. Hogan. Yes.
Mr. Welch. OK, thank you.
Thank you very much, Mr. Chairman. I yield back.
Mr. Whitfield. Peter, I knew you were from Vermont. I am
sorry, I said New Hampshire.
Mr. Welch. Well, that is OK, but----
Mr. Whitfield. We are glad you are here.
Mr. Welch. Thank you. It is good to be here.
Mr. Whitfield. Well, that concludes the testimony of Mrs.
Hogan and questions for her, so Dr. Hogan, thank you so much
for being with us today. We look forward to working with you as
we continue forward.
At this time, I would like to call up the third and final
panel. On the third panel, we have Mr. Kevin Kosisko, who is
Vice President Service, North America ABB, and he is testifying
on behalf of the National Electrical Manufacturers Association
and the Industry Energy Efficiency Coalition. We have Ms.
Britta MacIntosh, who is Vice President of Business
Development, NORESCO, who is testifying on behalf of the
Federal Performance Contracting Coalition. We have Mr. James
Crouse, Executive Vice President of Sales and Marketing,
Capstone Turbine Corporation, who is testifying on behalf of
the U.S. Combined Heat and Power Association. We have Ms. Ellen
Burt, Senior VP and Chief Customer Officer, Pacific Gas and
Electric Company. We have Mr. Neal Elliott, Associate Director
for Research, American Council for Energy Efficient Economy,
and we have Mr. Ted Gayer, Co-Director, Economic Studies and
Joseph Pechman Senior Fellow at the Brookings Institution.
So I would like to welcome all of the members of this
panel. Thank you for your patience, and thanks for agreeing to
join us today to give us your views, thoughts, and expertise on
this important subject. As you know, each one of you will be
given 5 minutes for your opening statement, and I would remind
you to just be sure that your microphone is on. You will notice
a couple of boxes on the table in which--when it is green, it
means talk. When it is red, it means stop, but we frequently go
over, so--but anyway, welcome and we will begin with you, Mr.
Kosisko.
Mr. Kosisko. Kosisko.
Mr. Whitfield. Kosisko. We will begin with you, and you are
recognized for 5 minutes.
STATEMENTS OF KEVIN C. KOSISKO, VICE PRESIDENT SERVICE, NORTH
AMERICA, ABB, INC., ON BEHALF OF NATIONAL ELECTRICAL
MANUFACTURERS ASSOCIATION AND INDUSTRIAL ENERGY EFFICIENCY
COALITION; BRITTA MACINTOSH, VICE PRESIDENT, BUSINESS
DEVELOPMENT, NORESCO, ON BEHALF OF FEDERAL PERFORMANCE
CONTRACTING COALITION; JAMES CROUSE, EXECUTIVE VICE PRESIDENT
OF SALES AND MARKETING, CAPSTONE TURBINE CORPORATION, ON BEHALF
OF U.S. COMBINED HEAT AND POWER ASSOCIATION; HELEN A. BURT,
SENIOR VICE PRESIDENT AND CHIEF CUSTOMER OFFICER, PACIFIC GAS
AND ELECTRIC COMPANY; R. NEAL ELLIOTT, ASSOCIATE DIRECTOR OF
RESEARCH, AMERICAN COUNCIL FOR AN ENERGY-EFFICIENT ECONOMY; AND
TED GAYER, CO-DIRECTOR, ECONOMIC STUDIES AND JOSEPH A. PECHMAN
SENIOR FELLOW, THE BROOKINGS INSTITUTE
STATEMENT OF KEVIN C. KOSISKO
Mr. Kosisko. Chairman Whitfield, Ranking Member Rush, and
members of the subcommittee. Thank you for allowing me to
testify on the successes and opportunities for energy
efficiency in the industrial sector.
I am Kevin Kosisko, Vice President of Services for ABB in
North America. I oversee services for asset management, process
safety and industrial energy efficiency, as well as maintenance
operations for ABB in the U.S., Canada and Mexico.
By way of background, ABB is a Fortune 500 producer of
power and automation products and services. We employ 147,000
people in over 100 countries, providing energy efficient
solutions for our industrial, utility, and government
customers.
I am honored to be here representing the National
Electrical Manufacturers Association (NEMA) and the Industrial
Energy Efficiency Coalition (IEEC).
NEMA is the trade association of electrical equipment and
medical imaging manufacturers. Its member companies produce
everything from power transmission and distribution equipment
to lighting systems, factory automation and controls and
medical diagnostic imaging systems.
The IEEC is a coalition of six of the largest global
industrial automation and control system companies. Those
companies are Eaton Corporation, GE, Rockwell Automation,
Schneider Electric, and Siemens, in addition to ABB. We are
technology providers that industry uses to make their processes
more energy efficient, reduce costs and increase
competitiveness.
ABB and IEEC believe that energy efficiency is the
cheapest, cleanest alternative fuel. It drives competition and
industrial success, and the good news is that there are proven,
available technologies that are already having an impact. My
written statement offers examples of energy efficiency
successes and case studies from each member of the IEEC. Yet
together, our examples barely touch the breadth of current
deployments and future possibilities.
A recent survey of manufacturing executives demonstrates
their understanding of the importance of energy efficiency and
the impediments to its use. Executives report basing their
energy efficiency investment decisions on cost benefit analyses
and the price of energy far more than other considerations.
Regulatory compliance was a distant third. Yet fewer than 40
percent of those surveyed had invested in efficiency in the
past 3 years. In the U.S., the situation is even starker with
only 21 percent having invested in equipment to improve energy
use in the last 3 years. The majority of those were in highly
energy-intensive manufacturing industries such as mining,
metals, chemical production, and petroleum refining. This gap
between awareness and action was attributed to three key
factors. Nearly half of the respondents cited the lack of clear
business case as a reason for inaction. Twenty-eight percent
identified inadequate funding or financing as a critical
barrier, and a lack of adequate information on efficiency
options was reported as the third greatest obstacle by 27
percent of those executives surveyed.
These responses point to the need for further education,
benchmarking, and identification of available technologies and/
or application, and to the importance of access to funding or
financing to enable investments.
Encouraging the efficiency enhancements needed to ensure
our competitiveness will require both industry's and
government's involvement. We must supply the missing
information and provide the necessary funding. At ABB and the
IEEC, we are striving to do just that. We work continually to
educate manufacturers on available technologies and industrial
best practices. We train engineers, assessors, and finance
teams to provide accurate, reliable energy audits, and
estimates on return on investment. We provide directly or
assist in securing necessary financing, and we invest in
ongoing research and development to continue innovation.
In the areas of industrial energy efficiency, government
has historically focused on reducing consumption in energy-
intensive industries. While these industries represent a major
portion of potential energy savings, the public sector has the
ability to expand the visibility of conservation opportunities
to industrial players both large and small. Hearings like this,
well-informed Department of Energy and Environmental Protection
Agency activities, and federal support for research, audit, and
deployment programs all raise awareness of the availability and
value of energy saving technologies. This is particularly true
for the small and mid-sized companies with less knowledge of or
expertise in newer efficiency tools. Tax policies and other
incentives can encourage investment. Advanced systems that
deploy networks of sensors, controls, and automation to achieve
significant energy savings can benefit from incentives to
provide a faster rate of return.
Government is unique in its ability to support basic
science and energy research, and State governments have the
principle role in setting the grid investment policies and
utility rate structures that enable deployment of critical line
loss reduction, power quality management, and grid reliability
technologies like Volt/VAr optimization.
There is no doubt of the ability of the U.S. industry to
compete and succeed. America's competitive edge is the high
level of productivity of our workers and the technologies and
processes we deploy to secure greater output from fewer
resources, including energy. At ABB, at NEMA, and at the IEEC,
we work daily to support that effort.
Mr. Chairman, thank you for the opportunity to testify. I
would ask that a copy of our latest energy efficiency white
paper be included in the record, and I am happy to answer any
questions the committee might have.
[The prepared statement of Mr. Kosisko follows:]
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Mr. Whitfield. Thank you. It will be included in the
record.
Ms. MacIntosh, you are recognized for 5 minutes.
STATEMENT OF BRITTA MACINTOSH
Ms. MacIntosh. Good afternoon, Chairman Whitfield and
members of the subcommittee.
Mr. Whitfield. Is your microphone on?
Ms. MacIntosh. Yes, sir. Can you hear me now?
I am Britta MacIntosh, Vice President of Business
Development for NORESCO, one of the largest energy service
companies in the United States. NORESCO is part of UTC Climate,
Controls and Security Systems, a unit of United Technologies
Corporation, a leading provider to the aerospace and building
systems industry worldwide. Thank you for the opportunity to
appear to you--before you today on behalf of the Federal
Performance Contracting Coalition.
The FPCC is a coalition of energy services companies that,
like NORESCO, implement projects that reduce federal spending
on energy and maintenance using private sector funding. Our
work is conducted using energy savings performance contracts,
or ESPCs----
Mr. Rush. Would you please speak into the mike?
Ms. MacIntosh. Our work is conducted using energy savings
performance contracts, or ESPCs. Since the 1990s, ESPC projects
have reduced waste in federal utility bills. Across the
industry, more than 570 comprehensive energy projects have been
implemented by 25 federal agencies, creating $13 billion in
guaranteed energy cost savings, and eliminating over 32
trillion BTUs of annual energy demand. By using performance-
based contracting to upgrade facility infrastructure, we
deliver energy and maintenance savings to government and
private sector entities. Performance-based contracting means
our company's compensation is tied to the realization of
savings for the projects we install. In other words, if we
don't perform, we don't get paid. At NORESCO, our projects have
delivered more than $3 billion in facility improvements at more
than 2,000 sites.
An ESPC redirects inefficient spending on energy into
needed infrastructure improvements that conserve energy and
dollars. Under an ESPC, energy services companies engineer and
install upgrades for outdated and inefficient equipment
financed by the energy services company and at no upfront cost
to the government. An agency will repay the government over
time--the company over time with funds saved on utility costs.
The projected energy savings are guaranteed upfront by the
company and are measured and verified during the contract
period. At no time does the government pay more than it would
have paid for utilities, had it not entered into an ESPC.
In 2010, for example, NORESCO, working together with the
architect for the Capitol, modernized the heating, cooling,
water, temperature control, and lighting systems here in the
Rayburn Building, and then also in the other House office
buildings. This project has cut Congress's energy and water
bills by more than $3.2 million annually.
The Federal Government is the Nation's largest energy
consumer, costing taxpayers over $7 billion annually. An
aggressive government-wide effort to eliminate energy waste in
buildings could easily cut that number by 20 percent or more.
Despite the opportunity to better steward the taxpayer's
investments in public facilities, several difficult obstacles
stand in the way. I would like to talk about three of those.
First, there is a lack of compliance with existing
congressional mandates. In 2010, Congress directed agencies to
audit their facilities to identify energy and water projects
that would pay for themselves within 10 years or less.
Currently, it is not clear where agencies stand on this audit
process, because those comprehensive reports requested by
Congress have not yet been delivered. Even less clear is where
agencies stand on implementing the energy savings measures
these audits have also identified. This information is critical
to understanding how much taxpayer money is being wasted
through inaction and inattention.
Second, there is a lack of an apples to apples comparison
between the use of appropriations and private sector investment
to provide agencies and Congress with the information needed to
make good decisions. Oak Ridge National Laboratory has outlined
in multiple studies that facilities which use appropriated
funds to replace outdated equipment failed to properly budget
for the ongoing maintenance of the new equipment. ESPCs require
the provision of ongoing maintenance and savings verification
to ensure that long-term persistence of savings and proper
operation of the equipment is achieved. In 2007, Congress also
directed agencies to implement a uniform approach to
maintenance and savings verification to ensure that the
government realizes the promised savings from any efficiency
upgrades, although most agencies have appeared to ignore this
direction for appropriated projects. We recommend that you ask
how agencies--that you ask agencies how and when this simple
requirement will be implemented for all efficiency projects,
regardless of how they are funded.
Third, the current approval process for ESPC contracts is
excessive, with multiple redundant layers of review in many
agencies. Officials with limited knowledge of the facility,
project, or recommended technologies are often required to
review and sign off on projects before they can proceed.
Congress should push agencies to streamline their review
process, allowing more projects to begin generating savings
more quickly.
In order to confirm that we are making true progress toward
meeting our Nation's energy and efficiency goals, Congress
needs to complete--needs complete information about available
energy savings opportunities at our agency's facilities, each
agency's plans for implementation, and full transparency and
accountability on all spending related to efficiency projects.
We recommend that you take appropriate steps to ensure that
prior congressional direction on these items is acted upon.
Thank you again for your time and attention. I will be glad
to answer any questions that you have.
[The prepared statement of Ms. MacIntosh follows:]
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Mr. Whitfield. Thank you, Ms. MacIntosh.
Mr. Crouse, you are recognized for 5 minutes.
STATEMENT OF JAMES CROUSE
Mr. Crouse. Can you hear me?
Thank you. Chairman Whitfield, Ranking Member Rush, and
distinguished members of the committee, my name is Jim Crouse
and I am the Executive Vice President of Sales and Marketing
for Capstone Turbine Corporation.
Capstone is the world's leading producer of low emission
microturbine systems. A microturbine is a small, fuel-flexible,
typically sized 1 megawatt and below, and can be best described
as a jet engine in a filing cabinet sized box. Other forms of
combined heat and power, or CHP, we are able to provide either
base load or backup power to deficiencies exponentially greater
than the grid.
I am delighted to be here today to testify on behalf of the
U.S. Combined Heat and Power Association. USCHPA is a non-
profit trade association formed in 1999 to promote deployment
of CHP systems in the United States through education and
advocacy.
I am going to speak today about the opportunity for natural
gas-fired CHP and the barriers to greater deployment of CHP
that policy makers can address.
Currently, there are 82 gigawatts, or about 7 percent of
all U.S. generating capacity produced by CHP systems. The
technical potential for additional CHP from existing sites in
the U.S. is approximately 130 gigawatts, or 12 percent of the
U.S. generation capacity. This is readily available capacity,
provided policies are established to support further CHP
deployment. Access to low cost U.S. natural gas resources makes
supporting CHP a no-brainer, and is an easy route to lower
emissions across the United States.
Microturbines and other CHP systems are used by customers
throughout the world in a variety of applications. Just to name
a few examples, they can be used in onshore and offshore oil
and gas sites, like the many transmission sites in Mr.
McKinley's district, offshore platform in Mr. Scalise's
district, military applications like the one at MacDill Air
Force Base, offices like our government office project in Mr.
Olsen's district, multi-unit residential buildings, hospitals,
like the VA hospital in Mr. Dingell's district, schools and
universities like--school in Ms. Capps's district, factories
like American River Packaging in Ms. Matsui's district, hotels
and other commercial sites like Proctor's theater in Mr.
Tonko's district, and wastewater treatment plants, like the
plants in Mr. Griffith's district and Ms. McMorris Rodgers's
district.
As referenced in my prepared remarks, CHP generally and
Capstone specifically offers customers reliable off grid power
that as witnessed during Superstorm Sandy provides critical
power and thermal energy to hospitals, nursing homes, shelters,
and data centers.
Despite these opportunities, our company and the CHP
industry continue to encounter numerous regulatory economic
barriers that prevent greater deployment. There are pragmatic,
cost effective solutions that policy makers can champion to
mitigate these issues.
To begin, we would like to see greater top level leadership
from the government. While the recent Executive Order calling
for 40 gigawatts of new CHP is helpful, we would be better
served if the government were to lead by example through
increased procurement of CHP to meet federal energy efficiency
goals. Additionally, as the EPA implements Boiler MACT, CHP
should be strongly encouraged as a compliance strategy for
those currently burning coal or oil. As part of this process,
facility managers faced with compliance can seek site-specific
technical and cost information from the DOE's clean energy
assistance centers. Similarly, we hope States will look to
EPA's guidance on output-based emission regulations, which
unlike input based standards, recognize both efficiency and
pollution prevention benefits of CHP. Output-based standards
encourage cost effective long-term pollution prevention through
efficiency. Likewise, we were glad to hear FERC proposed
reforms to small generator air connections. Interconnection
continues to be a barrier, but we continue to work with our
friends in the utility industry to demonstrate the benefits
that CHP provides for the grid and for consumers as a clean,
reliable, distributor resource. In addition, both States and
utilities should include CHP in their energy planning policies.
The CHP industry is eager to be an active stakeholder and
support a fair, interconnected standards in CHP rates.
Finally, we note that there are several technologies that
currently benefit from government support through various
levels of an investment tax credit. We believe the lack of
parity in support levels for decentralized and renewable energy
technologies blur the marketplace. We support parity in the
treatment of various types of clean energy sources, and would
encourage a focus on performance-based measures to best spur
market competition.
To wrap up, let me highlight again the opportunity exists
today to generate clean, reliable power through CHP systems at
existing industrial commercial sites across the United States
using U.S. natural gas. We appreciate your help in overcoming
these barriers that exist to greater deployment of our
innovative U.S.-made technology.
Thank you for the opportunity to testify at today's
hearing, and I look forward to answering any questions you may
have.
[The prepared statement of Mr. Crouse follows:]
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Mr. Whitfield. Thank you, Mr. Crouse.
Ms. Burt, you are recognized for 5 minutes.
STATEMENT OF HELEN A. BURT
Ms. Burt. Thank you. Good afternoon, Chairman Whitfield,
Ranking Member Rush. Let me begin by thanking you and members
of the committee for this opportunity to testify today. I am
Helen Burt, Chief Customer Officer for Pacific Gas and Electric
Company.
PG&E is one of America's largest combined gas and electric
utilities. We serve about 15 million people in northern and
central California, and over the last 30-plus years, together
with the State of California, we have helped customers achieve
extraordinary benefits when it comes to energy productivity.
For us, these efforts are about being smarter when it comes
to using energy. They are not about making do with less. They
are about doing more with the energy we consume, helping
customers get the most value of their energy dollars. Working
as partners, utilities and our State policy makers have been
able to support and encourage innovation and adoption of new
technologies, and we have developed the most successful
customer energy efficiency programs in the country.
Sometimes we are working with the end use customers like
homeowners or small business owners. Other times we are moving
further up the value chain, working directly with
manufacturers, distributors, retailers, and contractors. The
point is, we take a comprehensive approach and the results
reflect that.
If you look just at PG&E since our programs began some 30-
odd years ago, the customer savings have been more than $20
billion. We have also avoided the need to build more than 25
power plants, saving all our customers money and providing
tremendous environmental benefits.
What is remarkable is that the potential gains look even
greater today, thanks to the growing intersection between IT
and energy. Technologies like SmartMeters are creating huge new
opportunities. By enabling two-way communications on the grid,
they are opening the door for wider adoption of advanced
technologies like electric vehicles, smart thermostats, and
other energy management tools. But most significantly, they are
giving people more control over their energy bills. PG&E
customers can now get near real time information on their
energy usage. Last year, we were able to create an online tool
called the Green Button, which allows them to download that
data. They can then use various apps to help them understand
and then come up with options to achieve savings.
As significant as the potential is to achieve further
gains, we need the right policies. These include constructive
tax policies, support for research, development, and
deployment, supportive regulatory and rate structures, codes
and standards, and programs that empower consumers and help
companies share best practices. As you and others in Congress
consider ways to help drive further progress, I would to
highlight several areas where our experience shows you can have
the greatest impact.
One is encouraging regulatory approaches that incent
utilities to pursue efficiency. Many utilities still face
strong disincentives, changing this one key to success. At
PG&E, we now treat energy efficiency projects as a resource,
just like we do new traditional generation facilities.
Another area is improving regulatory consistency. Programs
work best when everyone can operate from a consistent set of
policies that they can count on for longer periods of time.
That way, they can make multi-year commitments to support
commercialization and deployment efforts.
We also recommend encouraging consistent and clear methods
for measuring and verifying the results of energy efficiency
projects.
A third area is encouraging public-private cooperation
between utilities and government. For example, PG&E manages
energy efficiency turnkey projects for federal customers
through our Utility Energy Services Contracts Program. One
effort now underway at the NASA Ames Research Center is
expected to save more than $1.5 million annually in water and
energy costs. Nationally, UESC projects are saving taxpayers
roughly $400 million a year. We should continue to encourage
these efforts.
Finally, a fourth area is building codes and appliance
standards. These provide a foundation for other energy
efficiency efforts, and drive new technologies, programs, and
practices.
Our hope is to work collaboratively with many members of
this committee, who are already exchanging good policy ideas
around energy productivity. New ideas and approaches will
evolve just as quickly as the technology around us. As PG&E in
California has demonstrated, energy efficiency can save money,
spur innovation, provide consumers with more choices, and make
our economy more productive and benefit the environment.
Thank you again for this opportunity. I look forward to
answering your questions.
[The prepared statement of Ms. Burt follows:]
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Mr. Whitfield. Thank you.
Mr. Elliott, you are recognized for 5 minutes.
STATEMENT OF R. NEAL ELLIOTT
Mr. Elliott. Thank you, Chairman Whitfield, Ranking Member
Rush, members of the committee. I appreciate the opportunity to
speak today. My name is Neal Elliott. I am the Associate
Director for Research at the American Council for an Energy
Efficient Economy, frequently called ACEEE. We are a private,
nonprofit, nonmember research institute based here in
Washington, D.C.
As Ranking Member Rush said in his opening remarks, ACEEE
has looked at the impact of energy efficiency on the U.S.
economy and found it to be a significant contributor to
economic growth over the last 40 years. In particular, I would
note that as has been noted by many of the witnesses so far
today, energy efficiency represents the least cost energy
resource in the U.S. economy, and a recent analysis suggests
that in 2010 it contributed about half as much as all of the
conventional resources to the U.S. economy.
I mentioned in my written testimony five areas that we
think the committee should consider for action in the coming
Congress, and wanted to focus three of those in my oral
remarks.
The first, which is has come up several times, is appliance
standards, and I wanted to mention that since 1987, with the
passage of the EPCA, Energy Policy Conservation Act, energy
standards have saved 3.4 quads of energy and that the standards
that are in place today are projected to save $1.1 trillion
through 2035.
We have many other standards that are currently in
development, and I wanted to bring to the attention of the
committee that one of the important ways that these are being
developed now is through a negotiated process in which the
energy efficiency advocates, people--stakeholders such as PG&E
and other utilities, and the manufacturers come together to
develop consensus proposal. The Energy Policy Act of 2005
enabled DOE to accept those consensus standards directly into
rule and we have begun to see that move forward in the process.
There are a number of negotiations that are currently underway.
In the past, these negotiations have been enacted as part of
the federal energy legislation, and we hope the committee will
consider several of the provisions that are currently under
development, as they look at legislation. This is a very
efficient and effective way to bring consensus between the
manufacturers and stakeholders, and move the market forward
together.
Second issue I wanted to raise to the committee is building
codes. As has been noted, buildings consume approximately 40
percent of the energy in the U.S. economy, and codes represent
the easiest and most cost effective way for consumers to
benefit from energy efficiency. It is important that we
continue to revise and look at best practices that exist in
terms of building codes, but it is also equally important that
we focus on the implementation of the building codes in the
marketplace. A building code on the books means nothing if the
builders out there in the market are actually not implementing
it, and we would encourage DOE to work with State and local
governments to build the capacity, both within the enforcement
side of this, but also work with the contracting community and
building community out there to implement the codes so that the
energy efficiency benefits are available to all customers.
Finally, the last area I wanted to speak about is
manufacturing. U.S. manufacturing sector is poised for a major
expansion and reinvestment, and until recently, has not
received a lot of attention at the federal level. In
particular, we would recommend three things the Department
should--the committee should consider.
First, we think it is important that the DOE's
manufacturing program be reenergized. There has been a lack of
leadership for over a decade there, and we think there is some
opportunities for it to move forward. Specifically, we would
recommend that the Department be directed to establish an
industrial steering committee to ensure a strong working
relationship exists between manufacturers, the Department, and
other stakeholders, and that that partnership should work to
leverage private sector funding. In the past, this program R&D
area has been among the most successful R&D efforts in the
entire Federal Government, and was able to leverage $3 in
private sector funding for every $1 that was spent by the
Federal Government.
Second, we think it is important to maintain a balance
between your term R&D, long-term R&D, and deployment, and all
of these need to be targeted in cooperation with the
manufacturers so that we receive maximum efficiency.
Finally, I wanted to mention the idea of smart
manufacturing. This is--as we look, we have already mentioned
intelligence in the marketplace. We think manufacturing will
benefit from that and encourage you to direct the Department to
initiate a smart manufacturing program to explore those
resources.
Thank you for the opportunity to present, and I look
forward to questions. Thank you.
[The prepared statement of Mr. Elliott follows:]
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Mr. Whitfield. Well thank you, Mr. Elliott, and Mr. Gayer
of the Brookings Institution, you are recognized for 5 minutes.
STATEMENT OF TED GAYER
Mr. Gayer. Great, thank you. Chairman Whitfield, Ranking
Member Rush, and members of the subcommittee, thank you very
much for the opportunity to appear here today. My comments will
cover the market incentives for energy efficiency innovation,
the most cost effective means of reducing pollution stemming
from energy use, and the limitations and problems associated
with government energy efficiency mandates.
First on market incentives. I believe that market prices
are good at conveying information about the strength of
consumer demand for a good, and the scarcity of supply for that
good, allowing for a balancing of buyers and seller's interest.
In the market for appliances, prices reflect how consumers
value features such as energy efficiency and convenience. If
the price of energy increases, consumers are willing to pay
more for more efficient appliances, providing a clear incentive
to suppliers to respond. The importance of energy prices for
the bottom line of consumers and businesses provides a strong
incentive for producers to provide the innovative energy
efficient products we see arriving on the market today, and
these market incentives account for the preponderance of energy
efficiency gains that have been mentioned in this hearing
today.
In addition to providing incentives for energy efficiency,
another important benefit of the market process is that
consumers with different preferences can find products that
best suit their needs. It is important to remember that there
is no uniformly right amount of energy efficiency for any given
product. However, market prices can provide misleading signals,
to the extent that they do not account for the pollution costs
stemming from energy use. In other words, the price that shows
up on one's electric bill accounts for the private cost of
energy, but it does not include any environmental--additional
environmental damages that impact others due to one's energy
use. Economists refer to these latter costs as ``negative
externalities.'' The best approach to addressing this problem
is for the government to price these costs directly. Consumers
and businesses would then face the full cost of energy use and
markets would respond through some combination of new
technologies, alternative fuels, and conservation.
There are a number of reasons why this market-oriented
approach of setting a price on pollution is more cost-effective
than regulations such as energy efficiency mandates. First, the
one-size-fits-all energy efficiency mandates ignore the
substantial diversity of preferences, financial resources, and
personal situations that consumers and businesses must align in
order to make their decisions. Second, energy efficiency
mandates do not promote conservation. For example, an energy
efficiency standard for air conditioners increases the
incentive to run the air conditioners longer. Third, energy
efficiency standards must squeeze energy reductions out of new
products only, and can even create incentives for consumers and
businesses to retain older, and thus less energy-efficient,
products.
In recent work I did with Kip Viscusi of Vanderbilt
University, we examined a number of recent government
regulations that mandate energy efficiency standards for
vehicles and appliances. Despite the fact that these
regulations frequently are touted as pollution-reducing
initiatives, by the agencies' own estimates, they confirm that
the environmental benefits tend to be quite small and are often
outweighed by the costs that they estimate.
In order to justify these regulations, the agencies assert
that consumers and firms are making incorrect purchase choices
and that they therefore benefit if product choices are
restricted to those that meet the agencies' mandated standards.
Dismissing consumer preferences outright in this way is a
significant departure from the well-established principles for
conducting cost-benefit analyses, both in the economics
literature, and I would add, by the Administration's Office of
Management and Budget.
By claiming regulatory benefits from the correction of so-
called ``consumer irrationality,'' agencies are shifting
regulatory priorities from the important goal of reducing the
harm individuals impose on others, through pollution, towards
the nebulous and unsupported goal of reducing harm individuals
cause to themselves by purchasing purportedly uneconomic
products. This shift from environmental protection to consumer
protection results in a host of costly regulations that are far
less effective than a government policy that simply sets a
price on pollution. It is important to emphasize that these
costs are real and that they harm economic well-being. Raising
the costs of consumer products and products used by businesses
through government mandates does not lead to economic growth or
job creation. It also establishes a dangerous precedent: If
agencies can justify regulations on the unsubstantiated premise
that consumers and businesses, but not the regulators, are
irrational, then they can justify the expansive use of
regulatory powers to control and constrain virtually all
choices consumers and businesses make.
To summarize, I believe that markets generally work well to
provide incentives for energy efficiency and to satisfy
consumers' diverse tastes. To the extent that prices fail to
incorporate the environmental cost of energy use, the most
sensible government response is to price the pollution costs
directly, and then allow consumers and businesses to respond to
the higher prices. Regulations and mandates are inferior
policies, but still may be better than doing nothing if the
benefits exceed the costs. Unfortunately, by the agencies' own
estimates, many of these mandates lead to minimal environmental
benefits that are far less than the costs that they estimate
themselves. In an effort to justify these regulations, the
agencies have deviated from well-established economic
principles by asserting that consumers and businesses benefit
from government mandates that restrict choice. The evidence for
this view, I believe, is weak, and assuming that citizens are
not capable of making sensible decisions that affect their own
pocketbooks is not the right way to advance the important goal
of enhancing the quality of our environment.
Thank you very much.
[The prepared statement of Mr. Gayer follows:]
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Mr. Whitfield. Thank you, Mr. Gayer, and thank all of your
for your testimony, and once again for being here with us
today.
Ms. Burt, I want to ask you a question to start off with. I
notice in your testimony you were talking about the per capita
use of energy in California has been flat since 1970, so we are
talking about 30 or 40 years. You are talking about the new
technologies that have been launched. You talked about the new
policies of the government and working with the utilities. You
talked about $20 billion in savings. You talked about the lack
of necessity to build 25 new generating plants. With all of
those efficiencies and everything else, why is it that the
California electricity rates are among the highest in the
country, with the exclusion of Alaska or Hawaii? You all have
been so productive in so many ways. Why is it that electricity
rates are so high out there?
Ms. Burt. Well thank you, Mr. Chairman, for the question
and for the opportunity.
California electric rates are high, and matter of fact,
they are within the top 25 across the country of major
utilities. The bills of Californians, however, are among the
lowest, and so I think you have to look at both of those in
collaboration.
Mr. Whitfield. How is that possible? How does that work?
Ms. Burt. Well, energy rates in California are higher the
more you use. It is an inclining tier structure and it is
designed that way to encourage energy efficiency. The lower
rates, though, however, are very comparable to other parts of
the United States. And so when we talk about rates, that is one
slice of it, but we actually work with our customers to lower
their bills, and that is really what they are about. You know,
again, we serve about 15 million Californians across northern
and central California, and we have a wide variety of customer
groups.
Mr. Whitfield. What would you say the average per kilowatt
hour is for industrial use in California?
Ms. Burt. You know, Mr. Chairman, I don't have that with me
directly but I can certainly get back to you with that
information.
Mr. Whitfield. I am assuming that it--I mean, I am not
complaining about it or anything, but I am assuming it must be
much higher, because if you have residential use really cutting
down on their consumption, and then that is low as the average
utility bill in America, that must mean the industrial use must
be a lot more expensive.
Ms. Burt. Thank you, Mr. Chairman, let me clarify a little
bit more. We actually have energy efficiency programs that span
across all of our customers. So within our energy users that
are high industrial customers are refineries, and we have many
in California. We have oil producers in California, we have
food processors within our service territory. We have programs
that work directly with each of those types of businesses to
lower their energy costs----
Mr. Whitfield. But even though the individual bills may be
low, why is it that the production is so high, the cost?
Ms. Burt. Well again, the energy policies across California
are designed to encourage conservation, encourage energy
efficiency. On the industrial side, however, again, what the
industrial customer--and frankly, what our commercial customers
and residential customers care about are the size of their
monthly bills. And the size of their monthly bills are among
the lowest in the Nation.
Mr. Whitfield. The size of your----
Ms. Burt. Of their monthly bills, so their usage is----
Mr. Whitfield. And we are talking about who and here now,
residential users?
Ms. Burt. Mr. Chairman, actually all of our customers. The
size of their monthly bills are among the lowest----
Mr. Whitfield. Are among the lowest in the country?
Ms. Burt. Yes, among the lowest in the country. They
certainly aren't the lowest, but they are among the lowest.
Mr. Whitfield. Mr. Crouse, let me ask you a question. The
Section 433 prohibits the use of fossil fuels in new or
modified federal buildings by the year 2030 or so. Now you were
testifying on behalf of the Combined Heat and Power
Association. Wouldn't a prohibition such as that make it more
difficult on the adoption of high efficiency technologies, such
as combined heat and power for federal buildings?
Mr. Crouse. Well, I think it certainly could. One of the
opportunities, though, is to look at biogas or other means of
destructing organic waste to use, then, the fuel or the natural
gas, the methane that comes off of the anaerobic digesters, or
in some cases, gas that would come from other processes on
those bases. The other, you know, option would be for us to
look at using natural gas as a fuel, as a transition fuel, and
look down the road at possibly using those new fuels that come
online and the new products that would become available in that
timeframe, to use them, including some of the new biofuels that
are looking at being generated from algae and from other
sources.
Mr. Whitfield. OK. Mr. Kosisko, my time is running out, but
I did pay attention to what you did with Archema down in my
district. That $300,000 annual savings was quite impressive,
and I want to thank you for mentioning that.
At this time, I recognize the gentleman from Illinois, Mr.
Rush, for 5 minutes.
Mr. Rush. Ms. Burt, you talked in your testimony about
PG&E's comprehensive approach to energy efficiency. You
included different strata of individuals and demographic groups
in your statement. The question that I have is do some of these
outreach programs that you discussed, have you engaged young
people, young students in some of this outreach and could you
speak to the educational activities and initiatives that you
have with the youngest of our citizens?
Ms. Burt. Thank you, Mr. Rush. Yes, absolutely, Congressman
Rush, we--our programs do contain a very large component of
education, both--primarily in the post-high school area. In
fact, we have three education centers across our service
territory, one in Stockton, one in San Francisco, and one in
the East Bay area that are really focused on training and
developing even job skills within energy efficiency. We have
got the oldest existing training facility in Stockton that has
been in place since 1978, and I believe we have trained
something in the neighborhood of over 91,000 people to really
go out and be productive in the jobs arena around really being
energy auditors, installing weatherization, all of the
different phases of energy efficiency within those three
centers. So we have a pretty broad record on that.
Mr. Rush. So you create some jobs with these programs? I am
trying to focus on young, even younger than high school. It
seems the earlier we include energy efficiency and an
understanding of the energy demand, energy sector, the energy
issues, including costs, but also efficiencies, the earlier we
include that in the education of our younger children, the more
we change the culture. I think we will have some tremendous
benefits. Do you engage, say, even at the grade school level?
Ms. Burt. Yes, Congressman Rush, we do. We have several
programs. One of them is our Solar Schools Program where we
really engage elementary age students around energy in
totality. So renewable resources, the value of solar--we
actually install solar panels on schools and use them in
demonstration--classroom demonstration pieces. We have a number
of other classroom demonstrations, both around energy
efficiency and energy in general within the school systems that
are used throughout our service territory.
Mr. Rush. In your opinion, how is the Federal Government
faring in these areas? Are there some things that we are
doing--are we doing enough as a Federal Government to raise the
level of consciousness of our grade school-level students, high
school-level students? Are we doing enough as a Federal
Government?
Ms. Burt. Thank you. That is a wonderful point. I think all
of us can do more to engage the next generation around energy,
and not just energy production, but using energy efficiency as
a source of production. And I think learning what new
technology--and again, the combining of really this new--the
new IT and smart grid with what energy efficiency can do is
going to be an amazing future for that generation. I think the
Federal Government can do more. I think we can all do more to
encourage education.
Mr. Rush. Thank you, Mr. Chairman. I yield back.
Mr. Whitfield. Gentleman yields back.
At this time, I recognize the gentleman from Texas, Dr.
Burgess, for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman. I appreciate the
recognition.
Ms. MacIntosh, let me ask you. You heard the testimony of
Dr. Hogan and the first panel. Do you work with the--with their
office, the Department of Energy Efficiency and Renewable
Energy?
Ms. MacIntosh. We do. All of the member companies of the
Federal Performance Contracting Coalition work hand-in-hand
with the Department of Energy. They oversee the indefinite
delivery and definite quantity contracts that we all operate
under to implement energy savings performance contracting for
the Federal Government.
Mr. Burgess. Now you referenced that there, in fact, was a
congressional mandate that required some of this performance
standards. Do you recall when that congressional mandate was
passed? In your written testimony, you referenced 1986 and said
implementation was occurring in the '90s. So--and this is a
well-established pattern, is that correct?
Ms. MacIntosh. Correct.
Mr. Burgess. This is not something that is new that should
be----
Ms. MacIntosh. Performance contracting? Oh, no.
Dr. Burgess [continuing]. A surprise to----
Ms. MacIntosh. It should not be a surprise to anyone.
Dr. Burgess [continuing]. Dr. Hogan? Well----
Mr. Whitfield. Ms. MacIntosh, would you mind using Mr.
Crouse's microphone, because we--and----
Ms. MacIntosh. Is this a little better?
Mr. Whitfield. Yes, that is better.
Mr. Burgess. Whoa, super. And you know, I was making the
point--and not just an academic one--in Congress, we get
criticized for passing mandates and then not living under them
ourselves. I referenced how in my own personal life I have made
energy efficiency decisions that were based upon what I would
consider would be the correct market signals. And yet, we have
a great big glorious federal building here, the Rayburn
Building. I am fortunate enough to have an office here. Yes,
indeed, they did change all the lighting around back in 2007 or
2008, but when I look at the biggest source of energy loss, it
has got to those single pane windows that are in existence in
the Rayburn Building, in the Cannon Building, in the Longworth
Building. I don't get to go over on the Senate side, but I
suspect you have got the same thing over there. So did you do
an audit for the Department of Energy on, say, the Rayburn
Building, like we have mandated that other industries do on
their structures?
Ms. MacIntosh. Yes, that is correct, and that was done in
the 2008-2009 timeframe. A comprehensive audit was performed
for all of the House office buildings. The same was also done
for the Senate office buildings.
Mr. Burgess. Yes, we will ignore the Senate for right now,
since they are ignoring us. Would it be fair to say that--I
mean, lighting, yes, it is a significant expense. To me, it
would have made more sense--I mean, had I been doing this in my
private life and I wanted to change all my lighting, I would
have waited until a bulb burned out and then replaced it with
an LED or a CFL, if that was my inclination. To go in and
change all the lights around--basically during a congressional
recess, I mean, that was a pretty expensive undertaking. I have
got no idea what happened to the old light bulbs. I hope they
gave them to another country so that they could use them. But
it almost seems like that was the obvious--the low-hanging
fruit in this endeavor, but if you really want to look at where
the energy efficiency exists in an older building like Rayburn
or Cannon or Longworth, it is going to be in the window
treatments, not in the lighting structures.
Ms. MacIntosh. Mr. Terry, the beauty of the energy saving
performance contracts--excuse me, Mr. Burgess--it was the
direct line of sight. The beauty of the energy savings
performance contracting program is that you are supposed to
look at things from a holistic standpoint. So energy savings
were generated from lighting, certainly, but that was really
only one of the many measures that were implemented. The real
meat of an ESPC, typically, is in the places you don't see. It
is in the chiller plant, it is in the boiler plant, it is in
the direct digital control systems of a facility that measure
and monitor and modulate temperature, for example. All of those
systems, including water systems as well, were addressed in all
of these buildings. You know, that audit that was performed at
the time is also intended to be a very comprehensive menu of
opportunities that we could implement to generate savings.
Mr. Burgess. Yes, we are going to run out of time. You
notice the chairman has a very quick gavel----
Ms. MacIntosh. Certainly.
Dr. Burgess [continuing]. When it comes to me, but could
you perhaps supply my office with that audit and perhaps
provide us a little direction as to what has been implemented
and what has been--what is waiting? Because again, I would like
to give people some reassurance that we are living under the
same rules that we are making for other people----
Ms. MacIntosh. Agreed.
Dr. Burgess [continuing]. And that the smart thing to do is
to respond to appropriate market signals and not the
congressional mandates.
Thank you, Mr. Chairman, for your indulgence. I am going to
yield back the final 2 seconds.
Mr. Whitfield. You are welcome, Dr. Burgess. I gave you an
extra 50 seconds the last time, so--at this time, I recognize
the gentleman from California, Mr. McNerney, for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman. I want to welcome
you to Washington, Ms. Burt, for your testimony here this
morning. I had the privilege of visiting a PG&E training
facility in Stockton, and with Chris Foster--it was about a
year ago, and it is certainly state-of-the-art. It is very
impressive. Do you think that that facility and facilities like
that are producing enough trained workers, or is there an
additional need for additional facilities to meet the market
demand right now?
Ms. Burt. Thank you. Thank you very much, and it is a
delight to be here, Congressman. We are certainly happy to be
here from California.
That facility in particularly and the other two, the sister
facilities that we have, the facility in San Ramon, which
really trains and really does a lot of research and work around
the food industry and emerging technology, and then the one in
San Francisco, which is really focused on architects and
building and really design. I will tell you, they are kept
consistently busy. And as you mentioned, the one in Stockton
has actually been in existence since 1978, and we have produced
91,000 trained workers. Our own workforce, we have about 700
people directly working for--on my team that do energy
efficiency, and then we hire in our communities another 2,000
practitioners within weatherization, and these are contractors
and we train them. We also trained a number of contractors in
the most recent funding, the ARA funding that was available. So
I must say that we don't find lack of need for training. There
always seems to be--I looked at the Pacific Energy Center just
the other day, and I think there were 950 separate classes that
were being offered. And I know last year in that facility
alone, we trained--and that, I think, is the smallest of our
facilities--we trained about 8,000 workers.
So it is certainly an area as energy efficiency becomes
more a part of the solution nationally that we should look at,
you know, and I think if we can get to the point where energy
efficiency is considered in other places as it is in California
as a part of the generation mix, just as a generation plant
would be, then I think we may need to look at more training
facilities.
Mr. McNerney. Thank you. How do you see the EV market
affecting PG&E's business plan over the next decade?
Ms. Burt. Well, thank you again. We are very excited about
the electric vehicle market. It does have challenges with it
because again, the distribution grid traditionally built across
our service territory as well as others is in need of
upgrading. We are in the midst of making our grid much smarter
to really integrate electric vehicles and other renewable
resources, but we are very excited about electric vehicles and
what they offer, particularly for the environmental benefits
and for our customers' benefits. We know that in our service
territory--I will tell you, my customers and your constituents
are very excited about using electric vehicles. So I think you
can expect to see us do more on that.
Mr. McNerney. Thank you.
Mr. Gayer, would you say that big improvements in energy
efficiency would have a stimulative impact on the national
economy?
Mr. Gayer. I think that market-driven improvements in
energy efficiency are good for the well-being of the economy
for sure. When you get to certain programs to stimulate, I
think it is a little bit dicier as far as whether or not it is
worth the cost. You would have to really see what is the labor
being employed and what would they have been doing otherwise.
In a time of great unemployment, I think there is much more
evidence that there is such a case, but if you are talking
about the long sweep of history, I think the evidence is
weaker. But certainly, energy innovation and energy efficiency
innovation is good for the economy.
Mr. McNerney. Thank you.
Mr. Elliott, is there anything that you would--that would
give us a better return on investment than energy efficiency in
terms of energy investments?
Mr. Elliott. Congressman, at this point I think energy
efficiency represents one of the best investments that is
available in the marketplace. We are in an environment right
now, in spite of the current low natural gas prices, where many
of the other energy sources are increasing in cost, as has
already been noted in the case of gasoline pricing right now,
and investment in energy efficiency represents an opportunity
to improve the U.S. GDP by reducing outflow of funds to foreign
countries. There is also the issue that investment in energy
efficiency makes other technologies equally accessible. For
example, investments in energy efficiency can enhance the cost
effectiveness of renewable energy by reducing the amount of
energy that is required.
Mr. McNerney. Thank you, Mr. Chairman.
Mr. Whitfield. Thank you.
At this time, I recognize the gentleman from Ohio, Mr.
Latta, for 5 minutes.
Mr. Latta. Thank you, Mr. Chairman, and thank you very much
to our panel for being with us today.
If I could, Mr. Gayer, if I could start with you. I
apologize for my voice. It is allergy season. But I found your
testimony interesting, because you kind of hit home to my
district. I represent 60,000 manufacturing jobs in northwest,
west central Ohio that we--some of our companies are very
large, some are very small. We have a great need for base load
capacity out there, and I go through factories, I mean,
literally all the time. And probably in the last, I am going to
say 5 months, I have been through about 150 facilities in my
district. And I find it interesting in your testimony what you
are talking about, because I hear this from my folks back home
all the time, you know. They see these mandates coming down
from Washington, and again, they are in a global--most of these
people are on a global marketplace and they are out there very
concerned about making sure that they can produce a product
that is competitive, that--not only in this country, but around
the world.
But in your testimony, I found it interesting. You were
talking about that--you said there were a number of reasons why
the market warranted an approach of setting a price of
pollution as cost effective, and then regulations such as
energy efficiency mandates, and you say that the one-size-fits-
all energy efficiency mandates ignore the substantial diversity
of preferences, financial resources, and personal situations.
And I tell you, that hits home to my district. If I can just
ask you, then, you know, when you talk about that, you said
that--you testified that the energy efficiency standards could
actually reverse some of the energy savings resulting in
negligible environmental benefits. Could you expand on that?
Mr. Gayer. Yes, sure. First, I think it is important in all
these questions to distinguish between--a lot of people are
talking about innovation and energy efficiency, and I think
that is a good thing, and when it is driven by the market, it
is accounting for their preferences and the diversity of taste
and financial circumstances. The problem comes when you have an
agency that essentially uses certain--imposes mandates and
essentially is asserting that certain preferences are in some
sense invalid.
Mr. Latta. Could you give me a couple of examples of----
Mr. Gayer. Well, I mean, it is a very simple thing. The way
you do it is these net present value calculations. You look
at--the agency will say well, we think for this appliance fuel
costs are going to be this in the future. We think the
appliance will last this long. We think you are going to use it
this many times, and we kind of figure out is the higher cost
today worth it for you to get the savings later, but it is not
accounting for other characteristics of convenience and feature
and your particular circumstance. And this happens, I think,
most egregiously when it comes to commercial products. I mean,
you have companies that--as I think you are alluding to, that
are very narrow profit margins, they are in very competitive
industries. Fuel costs might be a huge part of their operating
costs, and essentially they are being told you are not doing a
good job, considering the tradeoffs here, and I think my
response to the presumption is they probably are doing a pretty
good job of considering the tradeoffs, because they have
circumstances that can't be measured from the regulator's
perspective. And so the presumption should be that they
actually know what they are talking about. Again, there are
plenty of incentives for energy efficiency for that firm, and I
think that is good, but we don't want--I don't think we should
just mandate that--ignore their other preferences, and I think
that is what the market is good at accommodating.
My bigger point is a lot of the tech supporting these rules
are written from the angle that they are helping the
environment, but what I have just described is really consumer
protection. It is not environmental protection, it is saying
that you are making a mistake by buying an uneconomic product.
We, the regulator, are going to correct that. I don't think
there is evidence that there is a need for consumer protection,
but my point is that is a very different thing than designing a
regulation to say hey, we have got to worry about pollution.
You have your circumstances, but you are not considering that
you are emitting pollution. Let us address the pollution, and
you wind up with very different regulations.
Mr. Latta. Let me follow up for just a second where you
were talking about consumers. You know, what is best for the
consumers out there, then, the energy efficiency improvements
for market forces, or energy efficiency from the regulators?
Mr. Gayer. Oh, well certainly the former, because the
former actually considers they get to consider the other
tradeoffs and the other characteristics that either drive their
consumer preferences, or in the case of businesses, buying
these products, their bottom line. Essentially that is the
premise, is I get--I am better at spending money that affects
my bottom line than somebody else is, and the presumption
should be that. Again, if you are trying to adjust
environmental externalities, which I alluded to, I won't
consider that in my consumption decision, and that is, I think,
a strong role for the regulator there. But there needs to be a
distinction between are we trying to protect the environment or
are we really just consumer protection?
Mr. Latta. All right. I think that, you know, again when I
am going through my facilities back home that the folks back
there, you know, they are worried about that bottom like, and
you know, they all want to make sure that there is clean air
and clean water. And at the same time, they want to make sure
they are providing the jobs out there for the people in the
communities, because that is absolutely central.
Mr. Chairman, with that, I thank you for your indulgence
and I yield back.
Mr. Whitfield. Thank you.
At this time, I recognize the gentleman from California,
Mr. Waxman, for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
Energy efficiency standards set a minimum floor for the
efficiency of appliances and other products. Over the last 25
years, these standards have played a key role in improving the
efficiency of the appliances we all have in our homes. They
save consumers billions of dollars every year by lowering
utility bills, but some economists argue that energy efficiency
standards are a bad idea. They say that the costs of the
standards outweigh the benefits, and that they reduce consumer
choices. They also argue that any cost effective efficiency
measures would be taken anyway, even without the standards, and
Mr. Gayer made these arguments today.
Dr. Elliott, what do you think? Do the costs of these
standards outweigh the benefits, or do consumers come out
ahead?
Mr. Elliott. Congressman, I want to say that I am--in our
view and based on our research, consumers do come out ahead,
and I think we can get some very good examples on this. Perhaps
one of the longest regulated products in the marketplace is the
refrigerator today. My wife and I had the opportunity to
replace one recently, and the number of choices that we had in
buying this one compared to the one we bought 25 years ago, the
amenity values, the cost, the--were all substantial.
Mr. Waxman. Let me ask you this. Do the standards reduce or
increase consumer choice?
Mr. Elliott. I think our experience, at least looking at
things like lighting products, looking at things like
automobiles, looking at things like refrigerators, washing
machines, they have increased our consumer choice. We have more
options, we have more amenities. Part of this is a simple fact
that we have stimulated the manufacturers to redesign products
which they have no motivation otherwise to redesign.
Mr. Waxman. You, in your testimony, talked about huge
savings for major efficiency improvements. Would we have seen
benefits in the absence of efficiency standards, or are there
market barriers that would have prevented cost effective
efficiency improvements from being made? You talked about an
incentive for manufacturers. Are there barriers to them or they
just don't think about it because they don't have to?
Mr. Elliott. I mean, I think it is a complex issue, and as
with most things, you know, these are not simple decisions. A
lot of this comes down to information and we talk about in an
economic environment where we have perfect information.
Consumers don't have perfect information. They have lack of
information. They are not given or don't have access or the
time--we call that transaction cost--to be able to make the
choices that may----
Mr. Waxman. Well how about the choices that manufacturers
make? Are there barriers to them making efficiency choices?
Mr. Elliott. Absolutely. Part of it is there is no change
in the marketplace. In the case of a manufacturer, if we have a
static situation in the marketplace and there is no dynamic
there, they are not going to necessarily innovate. And so the
opportunity, I think, is standards allow them to innovate and
we have seen over the last 25 years in the manufacturer's
products that are regulated by standards coming to understand,
and in many cases, they have been beneficial to the
marketplace.
Mr. Waxman. All right, thank you.
Ms. Burt, PG&E has a lot of on-the-ground experience
implementing programs to incentivize energy efficiency. Do
consumers take every cost effective energy efficiency measure
on their own, or are supporting policies necessary?
Ms. Burt. Thank you, Congressman. We would agree that
supporting policies are necessary and, in fact, we do make
many, many, many of our programs available directly to the
consumer. We also give them a lot of information. But that
simply alone doesn't do the trick. We also have incentives to
manufacturers, so for example, the manufacturer that is
manufacturing a refrigerator, you know, our goal in California,
as you probably know, is to work collaboratively with
manufacturers across the country----
Mr. Waxman. And you have done that very well. I am sort of
moving forward because I only have a limited time, but I wanted
to ask you, first of all, you testified PG&E efficiency
programs result in energy savings that saved your customers $20
billion and avoided the need to build 25 large power plants.
These efficiency initiatives are cheaper than building new
power plants, aren't they?
Ms. Burt. Yes, sir, they are, and----
Mr. Waxman. And what is PG&E's experience with appliance
efficiency standards and State building codes? Are these
onerous government mandates or are they cost effective ways to
drive energy efficiency improvements?
Ms. Burt. Well, thank you. Our view of codes and standards
is they are part of the portfolio of energy efficiency. We work
on codes and standards. We work upstream with manufacturers. We
work with cities. We work with governments to create incentives
before the standards are set. So it is not as though the
standard is set first, you know. Our view of the world is let
us incent the more energy efficient refrigerator, more energy
efficient televisions, and then let the standard evolve as the
market pulls. And that has really been very effective in
California, as you know.
Mr. Waxman. Well, I commend you for what you have done in
California. Thank you very much.
Mr. Whitfield. Gentleman's time is expired.
I recognize the gentleman from Texas, Mr. Olson, for 5
minutes.
Mr. Olson. I thank the chairman and welcome the witnesses.
You start here in the morning, now it is the afternoon. So
thank you for your time, your expertise, and most importantly,
your persistence.
Mr. Kosisko, I would like to thank you for helping me to
tour ABB's facility in Houston last year. In your testimony,
you mentioned barriers to investment in industrial efficiency,
lack of a clear business case, inadequate funds for financing,
and a general lack of information. Could you expand on what
NEMA and IEEC are doing? Is there a particular success story
that stands out to you?
Mr. Kosisko. Thank you, Congressman, for the question.
NEMA, IEEC, and ABB are all working within the industry to
increase awareness, which I think is one of the key impediments
to adopting energy efficiency technologies into the industrial
space. Let me give you an example. If you look at a typical
industrial motor, for instance, that industrial motor, over its
life cycle, 2 percent of its total cost to operate is the
initial purchase price of that motor. Ninety-seven percent of
the cost is the energy utilized over its lifetime, but yet,
there are decisions made on a daily basis by various industrial
customers on the initial procurement price of that motor, and I
think it is widely made because of the lack of understanding
and general information available. NEMA and IEEC within ABB, we
do a lot to promote awareness and improve visibility of the
types of products and systems and services that will help in
industrial energy efficiency.
Another example, we have a show each year, Automation and
Power World, that we sponsor at ABB where we bring in over
2,000 industrial users into a conference. We have over 400
seminars. A good portion of those seminars are focused on
energy efficiency and the types of products, systems, and
services and other methods that could be used within the
industrial environment to reduce energy consumption and make
industry more competitive here in the United States.
Mr. Olson. Now I am questioning--being from Texas, one
thing I worry about is our grid reliability. Our State, our
margin for excess capacity is very slim now, and that is
largely because of overregulation by the Obama Administration,
our vast growing population, and conflicting federal agency
laws that force a power provider to choose between one agency
and another in direct conflict. I used the last Congress to
this Congress to adjust that factor, but I am intrigued by the
Volt/VAr grid optimization technology you have. Can you tell me
how that would work to improve the efficiency of the electric
grid and improve grid reliability?
Mr. Kosisko. We have several technologies that help
actually improve the efficiency of transmission and
distribution of power and grid reliability. One of the most
predominant is our high voltage direct current technology and
the transmission of energy. This allows for much lower losses
in the transmission of high voltage across longer distances,
and helps us to better connect the grid, whether it is with
traditional power sources or whether it is with alternative
power sources and renewable power sources. So that is just one
example. It typically reduces losses by about 10 percent, which
certainly is a terrific improvement when you look at the amount
of energy that gets transmitted across those lines.
We also provide software that helps manufacturers and grid
and utilities to better manage the grid, improve its
reliability, improve demand response so at peak seasons or at
peak times during the day, we could better produce energy in a
more effective way with lower cost fuels and better fuels. Just
a few examples. So we have several technologies in that space.
Mr. Olson. Thank you.
My final question is to you, Mr. Crouse. In your oral
testimony, you mentioned the Federal Government picking winners
and losers in the energy sector, largely through the RFS,
renewable fuel standards, as a challenge to combined heat and
power. I am also aware of a company back home called TAS, which
faces similar challenges. They are trying to do a waste heat to
power model of operations. Can you briefly describe the
differences between combined heat to power, waste heat to
power, and microturbines?
Mr. Crouse. Certainly, I will try. Thank you for the
question, Congressman.
You know, waste heat to power is typically taking an
existing thermal energy store--source and using it in a device
to generate additional electricity or make useful, you know,
products or energy out of it. Microturbines and other CHP
generation technologies are very similar in how our products
are applied. We install the generator, and then the thermal
energy is used typically with inside the facility of the host
client to increase the overall efficiency of the plant. So we
are able to use the electrical energy and the thermal energy to
make hot water steam, chilled water. You know, one of the
challenges we faced is the evaluation is far more complex for
CHP than it is for changing light bulbs or putting in high
efficiency motors or VFDs, so the challenge is customers tend
to shy away from more complex transactions and/or payback
scenarios than the simpler ones. That is one of the uphill
battles that we have.
Mr. Olson. Thanks. I am out of time. I yield back.
Mr. Whitfield. Gentleman's time is expired.
At this time, I recognize the gentleman from New York, Mr.
Tonko, for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
First, an observation. I have heard so many comments here
today about--from the panel about what the market rule, what
the private sector--the agents have changed and that things
will happen, and I find it interesting. There was a great call
for policies, for standards, for regulation, for incentives,
for codes, for implementation of those items above, and calling
for investments and R&D appeal. So I think it is a very telling
statement here today.
I would first go to Ms. MacIntosh, please. You state in
your testimony that the barriers to increase usage of an ESPC
are difficult to quantify. I would ask, what role do energy
prices play in a decision to use an energy savings performance
contract?
Ms. MacIntosh. That is a very good question. Energy prices
obviously dictate the breadth with which we can apply an energy
savings performance contract to a facility, because all of the
project implementation costs and care and feeding of an ESPC
are covered by the energy savings and the energy cost savings
that are generated by those improvements. The areas where you
have high energy rates are obviously going to have an easier
time of doing a performance contract than areas where energy
rates are more competitive.
Mr. Tonko. And then how are the changes in energy prices in
the term of a contract addressed? How do those changes get
incorporated into the contract?
Ms. MacIntosh. What we do in the course of developing an
energy savings performance contract is a lot of historical
analysis of how energy rates have changed for that particular
customer over time, and then we utilize a lot of sources
through Department of Energy, through NIS, and other areas on
what forward projections are supposed to be, and then we look
to put together a conservative value on what we believe the
energy prices are going to be, a floor, if you will, to utilize
throughout the term of the contract.
Mr. Tonko. Back in my New York State days working with
energy policy and implementation, we held a hearing with data
centers. Do you see the application with data centers being a
real thing?
Ms. MacIntosh. We are just starting to see that as a real
possibility in energy savings performance contracting because
of their high energy draw, and there is an awful lot of
technology advancement that is happening in the IT and data
center arena. So it certainly is an opportunity for us to
incorporate ESPC in that market.
Mr. Tonko. Thank you.
Mr. Crouse, the barriers to expanded deployment of CHP may
be many, but finding the upfront capital, I have to believe, is
a big thing, the capital investment. Have the energy savings
performance contracts been used much by the private sector to
install CHP?
Mr. Crouse. Certainly. We have customers that use the
energy savings model in the private sector as well as in the
government sector to deploy our technology and other CHP
technologies.
Mr. Tonko. And where in our industrial applications do you
see some of the best opportunities?
Mr. Crouse. You know, I think you need a customer that is
using thermal energy--hot water, steam are the easiest sort of
customers. Food processing, cheese, you know, customers in the
plastics business are natural targets for us. So those are on
the industrial side some of the low-hanging fruit, if you will.
Mr. Tonko. And Mr. Elliott, I assume some of the resistance
to new product efficiency standards is the cost to
manufacturers of altering their product design and
manufacturing process. What is the experience that you have
with the product vendors, in terms of perhaps incorporating the
message for efficiency of--efficiency standards?
Mr. Elliott. There absolutely is a significant transaction
cost for a manufacturer when they do reengineer their products
or reengineer their products to incorporate energy efficiency.
That said, that also gives them the opportunity to revise their
manufacturing processes. For example, in the electric motor
industry when we saw motor standards come in, we saw a
consolidation of motor designs by the manufacturers and
implementation of flexible manufacturing. So this actually
allowed them to produce a higher quality product that was
accepted by the marketplace as a--on the basis of its
performance. So yes, there was cost occurred--incurred by the
manufacturers, but what it did was really allow them, in the
case of the motors, not only produce a product that met the
customers' needs better, but also allowed them to compete
globally against many of the low-cost producers who were not
being able to produce a product of similar performance.
Mr. Tonko. Thank you.
Ms. Burt, just a comment to your earlier statement.
Consumers don't pay rates, they pay bills, so I appreciated the
statement that was being given.
With that, Mr. Chair, I will yield back.
Mr. Whitfield. Gentleman's time is expired.
At this time, I recognize the gentleman from Virginia, Mr.
Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman. I will follow up on
some comments that were made earlier, and maybe in the previous
panel for some of it. I would like to say--I am going to ask
you a question in a minute about that Christiansburg facility,
but I do look forward to going up there and seeing it in action
at some point in time, but I am going to get you to do a little
science on it for me, Mr. Crouse.
Before that, I would like to say to you, Mr. Kosisko, thank
you so much for having a facility in the Ninth District of
Virginia. It is doing great work there, and our biggest problem
is is that because it abuts a mountain, we have got to find
space to expand, and I hope that it will still be in the Ninth
District of Virginia, but we don't have that many flat places.
But anything I can do to help you all find facilities for the
current facility or anything else you would like to move to my
district, I am more than happy to do, and I appreciate all the
work that you are doing.
Ms. MacIntosh, I would like to get a copy of the inventory
or survey of the buildings on at least the House side as well.
I love the windows, but I agree with Dr. Burgess, there has got
to be something we can do a little more efficient than the
current windows that we have. I will confess that I like to
open those windows from time to time, particularly when the
weather is nice, and I would hate to lose that, but also, I
understand that we have got to have some energy efficiency.
That being said, going back to a previous panel, I would
comment that I do worry a bit about not having buildings that
breathe a little bit, because then the indoor air pollution
does go up, as Mr. McKinley pointed out, and so that is
something we do have to put in the overall equation.
Mr. Crouse, coming back to you, I would ask so that you can
explain it to me, because I am not an engineer. I was a lawyer
before I came to Congress. You have got a 65 kilowatt
microturbine installation in the town Christiansburg waste
water treatment plant, and you indicated in answers to
questioned earlier that a lot of those facilities where these
are located, they use it onsite. I am trying to figure out--and
they may not, but does Christiansburg use that energy onsite,
or does it--do they wheel it off somewhere else?
Mr. Crouse. Thank you for the question, Congressman. They
certainly use it onsite. Waste water treatment plants are
unique in that they do a lot of water pumping. They also use
the thermal energy to heat the digesters, so especially in the
winter months, you know, to keep the chemical composition, the
temperature correct in the digester, they use the thermal
energy from their CHP system, and then the electricity is
just--reduces the amount of purchase power that they have from
the utility, because typically they do not generate enough
digester gas to supply all of their electrical requirements at
a waste water treatment plant.
Mr. Griffith. All right. Thank you very much.
I should mention that ABB does a lot. When I toured their
facility there in Bland, I did note that they pointed out a lot
of things that they were doing to keep their energy costs under
control and to be very efficient at that facility. I would also
have to note that I went back for, I don't know, a second or
third tour to the large Volvo facility in my district, and they
are doing all kinds of things. They have got a couple of
windmills, they have got solar panels. They have installed
passive solar in a number of places where there--because they
are skilled at doing a lot of these things, they have actually
done a lot of it themselves. But the one that I found the most
interesting that I think folks maybe want to pay attention to
is that somebody on their team--they have suggestion boxes and
give out rewards. Somebody on their team figured out that
because they have 2,000-plus people who are captive in the
factory, they all know where the drink machines are and where
the snack machines are, and so they took the light bulbs out of
them and they were really surprised at how much electricity
they saved. So when we are talking about efficiencies,
sometimes simple things work very well in that regard.
Mr. Gayer, I have only got a minute left, but I was
wondering if you could comment on refrigerators since that came
up earlier, because one of the things I have noticed is, well,
I think we all ought to have the most efficient equipment that
we can have. If you have got a refrigerator that is struggling
on, you might stay there if the cost is high to do something
else, and a lot of the innovations I have seen have been
technologically driven as opposed to energy efficiency, because
I can't imagine that water and ice in the door as opposed to
having to reach inside is a whole lot more efficient. Maybe it
is. Can you expand on that and help me out?
Mr. Gayer. Yes, a few things. One is I agree with Mr.
Elliott, the choice has expanded over the last few decades in
all appliances, but I think that is market driven and certainly
not due to mandates, which by their nature, restrict choice.
And you are exactly right, one of the reasons these don't work
that effectively or cost effectively to reduce energy is
because people sometimes hang on to their older products
longer, especially if it is a big ticket item, and it is going
to cost more money due to a different--a new regulation.
Mr. Griffith. And do you have any data that would indicate
how much the price of a--percentage-wise or otherwise that--how
much the price of a refrigerator has been impacted by----
Mr. Gayer. I don't have it with me. There is a--primarily
in the vehicles, when one deals with vehicles too. There is
always an impact whenever you raise CAFE AE1 standards, you
have to worry about you get a slower turnover of the fleet and
new vehicles tend to be more fuel efficient. I don't have the
numbers offhand, though.
Mr. Griffith. All right, thank you, sir.
Mr. Whitfield. Gentleman's time is expired.
At this time, I recognize the gentlelady from California,
Ms. Capps, for 5 minutes.
Mrs. Capps. I want to thank the chairman for calling
today's hearing. Thank you to all of our witnesses for a long
day of testimony.
I think it is a great topic. Increasing energy efficiency
is critical to our Nation's energy future, and as is clear from
today's testimony, the private sector is doing a great job of
innovating and bringing new energy efficient technologies to
customers. But the federal policy, I believe, also plays a
critical role in this process. Neither the Federal Government
nor the private sector on its own does as good a job as we want
to have done when they all work together. But working together,
these public-private partnerships can lead to great
advancements that create jobs and can save consumers money, but
also spur innovation and benefit the environment. I see it
every day back home in my district on the Central Coast of
California. I represent two world-class research universities:
Cal-Poly San Luis Obispo and the University of California at
Santa Barbara. Research conducted at these public universities
is frequently spun off into very successful local companies
which I have visited, like Soraa and Transphorm, and many
others. These companies continue to innovate and develop new
technologies, and they are creating jobs at the same time,
spurring economic growth.
So my first question is to you, Mr. Crouse. Your company is
similarly innovating and staying at the forefront of your
industry. In your testimony, you mentioned federal R&D funding
as an important contributor to your company's growth. Could you
elaborate on that just for a minute, because I want to ask
other questions, too, but how has Capstone benefitted from
federal R&D funding?
Mr. Crouse. Thank you. I will be as quick as I can.
The--we have several programs currently that we are working
towards efficiency and reliability, so through the DOE, we have
a 250 and a 370 kilo microturbine that we are developing that
will improve the electrical efficiency of our product and
broaden the number of applications it can go into to get higher
overall efficiencies. And then we are working on other fuel
types, syn gas and other things. Some of our original
technology was developed in cooperation with the public sector
as well.
Mrs. Capps. So you are a good example for the rest of us.
My second question goes to you, Ms. Burt. Of course, these
energy efficient technologies not only create jobs and support
small businesses, but they also benefit consumers. I want to
focus on this intersection between technology and energy and
how it really makes a difference in the lives of the people,
and that is actually the bottom line. Ms. Burt, we all know how
these technologies can reduce energy use in our homes and
businesses, and lower cost for consumers, but I am curious
about the efficiency improvements being made to our energy
infrastructure. For example, could you discuss what efficiency
technologies PG&E is deploying on the infrastructure side and
how this is going to benefit consumers in the long run?
Ms. Burt. Thank you. That is a very good point. We are--
again, this is the intersection between technology and energy,
and it is very evident in the smart grid that is being
deployed. Within California and our distribution network, we
are deploying a device called a FLISR, and that is not a very
catchy name, but it stands for fault location isolation, and
service restoration, and it literally takes any kind of
interruption along the circuits that have the device from being
a typical 1 to 2 hour outage to being less than 5 minutes. And
as we deploy those, we have deployed--about 135 circuits are
completely deployed to date. By the end of this year, we will
have 400 circuits deployed, and I am really happy to say that
in 2012, we had the highest reliability we have experienced in
the history of our company. So we are quite pleased with how
intelligence and energy efficiency works within the grid as
well.
Mrs. Capps. And when that disruption in service happens,
you know, there is a ripple effect on how it impacts your
customers.
Finally, Ms. Burt, I want to touch on a key point that you
made in your testimony about energy efficiency training. PG&E--
and I am thinking about the facilities I have in my district--
your Pacific Energy Center has been training students in energy
efficiency for many years. I am curious about the demand for
this kind of training. Have you seen enrollment in your
training courses increasing in recent years? If so, why do you
think that is? In other words, is this catching on?
Ms. Burt. Thank you, Congresswoman. I do believe that we
have seen enrollment increasing, particular with the ARRA
funding and the weatherization and the cities and counties and
the jobs that were created within the State of California. Our
role in that--we weren't a part of the funding, but our role in
that was to train and properly train----
Mrs. Capps. Right.
Ms. Burt [continuing]. The workforce. So we have seen a
consistent increasing interest in these sorts of jobs, because
they are very relevant.
Mrs. Capps. And I saw this firsthand during the recession.
The weatherization of older homes--what is it, any structure
that is over 10 years old, maybe it is even less than that?
Ms. Burt. Yes.
Mr. Capps. Can benefit cost-wise, bottom line-wise, and
then you can train unemployed people, give them a job. It is
not very sophisticated in many ways, focusing on just older
homes, putting in more efficient windows, window sills, the
win-win with more people working, and the lower energy cost for
maybe a couple living on a fixed income. It just--it does
really--over the long haul really have an impact.
Thank you very much for your time.
Mr. Whitfield. The gentlelady's time is expired. At this
time, I recognize the gentleman from Illinois, Mr. Kinzinger,
for 5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman, and thank you all
for coming. I really appreciate it.
As has been discussed today by our first few panels,
improving energy efficiency in America will play a pivotal role
in increasing U.S. energy productivity and making America more
energy secure. The benefits from implementing energy saving
techniques and technologies are felt by nearly every part of
society through higher productivity, reduced energy costs,
lessened environmental impacts, and a return of billions of
dollars to our economy that was previously going to waste. As
we move forward to promote adoption of energy saving
technologies and improve awareness of their benefits, promoting
the facts outside of the light of partisan politics will be
crucial.
Recently it was my honor to be nominated to serve as an
honorary vice chair to the Alliance to Save Energy, a
bipartisan group of members of Congress, corporate CEOs, and
organizational leaders focused on promoting the benefits of
energy saving technologies and encouraging their adoption. I am
excited to be working with this diverse group, and believe it
can serve as a model for problem solving across the partisan
divides, which we kind of need nowadays.
At this time, I ask unanimous consent that the Alliance
Commission on National Energy Efficiency Policy Energy 2030
Report be included for the record.
Mr. Whitfield. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Kinzinger. The benefits of adopting energy efficient
technologies are undeniable. Congress must work to educate
consumers and businesses to these benefits, allowing for the
private sector to move forward, upgrading our energy
infrastructure.
I want to commend private industry for taking the steps to
ensure energy efficiency. I particularly want to thank the pay
TV industry, which includes cable operators, Bell companies,
satellite providers, and consumer electronics manufacturers for
their agreement announced last year to make sure that
consumers' set top boxes are even more energy efficient. This
is a great precedent for the private sector, stepping up to the
plate and doing the right thing without government mandates.
Mr. Kosisko, in your testimony you mentioned a 2011 study
by the Economist Business Intelligence Unit in which businesses
were asked to identify the main barriers to investment and
industrial energy efficiency. By far, the most popular response
was a lack of clear cut financial case for the energy
efficiency investments. How can government work with
organizations and companies like yours to get out the facts and
make the clear cut case for companies to make energy efficient
upgrades?
Mr. Kosisko. Thank you, Congressman. You know, as I
mentioned before, I think that education, I think that
promotion and creating visibility in the marketplace is going
to be crucial to us moving forward. Certainly, you know, there
is a competition for capital. When you look at private
investment in industrial companies, they are going to make
decisions based on how they can most effectively use the
capital over the next 2 to 3 to 4 years. Some of these
technologies have longer payback periods, so I think it is
important that we provide the level of education so that they
can make targeted decisions in certain technologies that will
have shorter payback periods, produce results for them in a
shorter timeframe, but also, I think that we need to look at
what we can do in a smart way to promote them in using these
technologies that may have longer payback periods, but will be
crucial for us in maintaining our competitiveness from an
industrial perspective in this global economy.
Mr. Kinzinger. Well thank you, and I think even having
these hearings is a good start.
Ms. Burt, in your written testimony you commend the work
and recommendations of the Alliance to Save Energy's Commission
on National Energy Efficiency Policy, which issued a report,
Energy 2030, highlighting several policies concerning existing
technologies for policy makers to include to consider. Of those
recommendations to increase energy productivity is for the
government to lead by example. You also mentioned that Pacific
Gas and Electric Company is currently completing a project for
NASA Ames Research Center near Mountain View, California. This
project encompasses more than 100 buildings and covers in
excess of 2.5 million square feet, and allowed NASA to save 9
gigawatt hours of electricity, 1.3 million therms of natural
gas, and more than 15 million gallons of water annually. With
results this substantial, could programs with similar amounts
of savings be duplicated at other federal agencies? If so, what
are the main challenges that we face in doing that?
Ms. Burt. Yes, thank you, Congressman. They absolutely can
be duplicated. In fact, we have three currently underway and 11
that we are hoping to move forward with within our service
territory. What are the main area of improvement is really in
the contracting. What we have found is that as we work with
NASA Ames, the VA, the IRS in Fresno, the FAA in another part
of our service territory, it is a complete recontracting
process. So if we could find some sort of simple
standardization for these sorts of contracts for the utility
services contracts, I think that would benefit both sides.
Mr. Kinzinger. That sounds great, perfect time, too. I
yield back.
Mr. Whitfield. Thank you, Mr. Kinzinger.
At this time, I recognize the gentleman from Illinois for
an additional question.
Mr. Rush. Ms. Burt, I do have one quick question. I am very
impressed with what PG&E is doing in California, and are there
similar programs that you are aware of in Illinois or Chicago,
in terms of your training programs?
Ms. Burt. Thank you, Congressman. I am just not that well-
versed in Illinois. I am very, very well-versed in California,
but not in Illinois.
Mr. Whitfield. Thank you all very much, and before we
conclude, I am just asking unanimous consent that the following
materials and statements be entered into the record from Arkema
Corporation, the American Chemistry Council, the Alliance for
Industrial Efficiency, Heat is Power Association, and Pew
Charitable Trust.
Without objection, I would enter these into the record.
[The information appears at the conclusion of the hearing.]
Mr. Whitfield. Thank you all once again for your time and
traveling to come to Washington. We appreciate your testimony
and we look forward to working with all of you, and hope the
next time we have a hearing on efficiency, which we will soon,
that we will have just as many people stay throughout the
entire hearing.
So thank you all very much, and with that, the hearing is
adjourned and the record will be open for 10 days.
[Whereupon, at 1:36 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. John D. Dingell
Mr. Chairman, energy efficiency is one of the simpler ways
for us to achieve energy independence and security. By making
the vehicles, appliances, and buildings we use every day more
efficient, we can get more bang for our energy buck.
Recently, the cable industry announced new efficiency
standards for the cable boxes we use to watch and record our
favorite shows. These improvements will result in half of the
energy currently consumed and estimates are that the new
efficiencies will cut consumers' electricity bills by
approximately $1.5 billion. To speed up efficiency improvements
for existing boxes, the industry will release a software update
that will immediately result in energy savings of 20 to 30
percent on current devices.
The cable industry is to be commended on this forward
thinking to adopt practices that can take effect now and
drastically improve efficiency moving forward. As our country
looks to new sources of energy such as fossil, nuclear, and
renewable, we must also look for the low-hanging fruit that
help us address this issue.
In addition to this innovative thinking by industry, I also
believe that industry must continue to work with regulators
because good energy policy and good economic policy go hand in
hand. By collaborating with industry and consumer groups, the
Federal government can develop standards that can be cost-
effective for both industry and consumers while maintaining our
energy security.
There was a time, not too long ago, when we could work on a
bipartisan basis to develop ways for American companies to
compete and innovate. The Energy Independence and Security Act
of 2007 was probably the most recent example of that
bipartisanship. It was signed into law by President Bush and
supported by many members of this committee on both sides of
the aisle including the chairmen of this subcommittee and of
the full committee.
We cannot pretend that industry does not have good
intentions or that Federal regulations are the root of all
economic problems. We must all work together if want to find
the best solutions to invest in our future and secure our
energy independence and security.
----------
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