Energy Efficiency Hearing: House E&C Energy and Power Subcommittee

Executive Summary for the Energy and Commerce Committee Subcommittee on Energy
and Power, Hearing entitled “Discussion Draft on Accountability and Department of
Energy Perspectives on Title IV: Energy Efficiency”
June 3 and June 4, 2015

Witnesses—Panel 1:

Dr. Kathleen Hogan (U.S. Department of Energy, Deputy Assistant Secretary for Energy Efficiency)

Mr. J. Arnold Quinn (Federal Energy Regulatory Commission, Office of Energy Policy and Innovation, Director)

Mr. Larry R. Parkinson (Federal Energy Regulatory Commission, Office of Enforcement, Director)

Witnesses—Panel 2

Ms. Sue Kelly (American Public Power Association, President and CEO)

Mr. John E. Shelk (Electric Power Supply Association, President and CEO)

Mr. Peter Kelly (Competitive Power Ventures, Manager of Public and Government Relations)

Mr. Christopher Cook (Solar Grid Storage LLC, President and General Counsel)

Mr. Jonathan M. Weisgall (Berkshire Hathaway Energy, Legislative and Regulatory Affairs, Vice President)

Mr. William S. Scherman (Gibson, Dunn & Crutcher LLP, Partner)

On June 3, 2015,  the Energy and Commerce Committee Subcommittee on Energy and Power began its two-day hearing on the Discussion Draft on Accountability and Department of Energy Perspectives on Title IV: Energy Efficiency. On the first day, members of the subcommittee listened to and questioned the first witness panel. They reconvened on June 4, 2015 to question the second panel of witnesses regarding the Discussion Draft proposal. This two-day hearing focused on two Subtitles of the Discussion Draft proposal. Subtitle A on Energy Efficiency intends to maximize federal government savings on energy and cost, and encourages the use and development of innovative energy efficient technologies within the private sector. Subtitle B on Accountability pursues increased transparency, fairness, and clarity for energy market participants. During this hearing, witnesses and committee members provided feedback on the proposal.

During day-one of the hearing, four Representatives offered opening statements. Chairman Whitfield (R-KY) offered his general support for the proposal. Representatives Pallone (D-NJ), McNerney (D-CA), and Rush (D-IL) expressed their opposition to the draft proposal. Specifically, they contended that the section regarding reform for Federal Energy Regulatory Commission (FERC) investigations helps corporations more than consumers. They also asserted that the proposal should alter Section 210 of the Public Utility Regulatory Policies Act of 1978 (PURPA) to a lesser extent.

Furthermore, concerns were raised that Section 4211’s establishment of a FERC Office of Compliance Assistance is neither necessary nor feasible because no additional funding will be granted to the Office and it will perform duplicate tasks. Additionally, they argued that the communication requirements outlined in Section 4212 are overly burdensome. Finally, they expressed concern about the impact of the proposal on low-income areas and the environment.

The first panel consisted of three witnesses, each of whom provided opening remarks. First, Dr. Hogan stated that she believes Title IV generally enables progress on increasing energy efficiency, yet is concerned that departments are undermined. Second, Mr. Quinn suggested that the proposed timelines by the draft are unreasonable. He also expressed specific concern that some criteria outlined in Section 4221 will impair the competitive edge of markets and cause conflicts between state and regulatory offices. Finally, Mr. Parkinson defended FERC practices and efforts, emphasizing that some provisions of the draft erect unnecessary barriers between the investigation process and the judicial process that would create delayed outcomes.

The question and answer period revealed disagreement about whether current environmental standards for new technologies create an increased cost burden on low and middle-income communities. While Representatives Shimkus (R-IL) and Flores (R-TX) argued that these standards are indeed burdensome, Dr. Hogan and Representative Rush disagreed. Additionally, Representative Griffith (R-VA) fought head-to-head with Mr. Parkinson, arguing that the current judicial process of FERC does not include due process and must be remedied. Mr. Parkinson insisted that there is nothing unfair about FERC’s current judicial proceedings.
Day-two of the hearing began with opening remarks from a second witness panel, consisting of six witnesses. First, Ms. Kelly stated that the current FERC process is preferable to the proposed changes in Section 4211. Mr. Kelly also shared criticism of the proposal, asserting that the transfer of authority under Section 4221 will be difficult for states to implement.

Conversely, Mr. Shelk, Mr. Weisgall, Mr. Cook, and Mr. Scherman supported changing the status quo. They argued that FERC rules are currently too restrictive and prevent the achievement of properly regulated markets. Additionally, they asserted that some of FERC’s expectations are unreasonable and do not account for the resource limitations of smaller companies.

Furthermore, they stressed the need for meaningful structural reform of the FERC judicial process. Specifically, they argued that the notion that federal courts adequately review FERC decisions is a fallacy and that there must be differentiation between the investigative and judicial processes. Finally, they suggested modernizing PURPA, explaining that under its current mandate, consumers are sometimes forced to pay far over the market value for energy.

During the question and answer period, Mr. Cook and Ms. Kelly described the phenomenon in which cutoffs for small utilities and small generators are sometimes larger than their capacity, forcing them to pay for a higher rate than they can produce. Mr. Cook also argued that striking the entirety of FERC Order 688 would prevent the creation of market entry barriers.

For more information, please contact James Voyles (jvoyles@hbwresources.com)