[Senate Hearing 109-25]
[From the U.S. Government Publishing Office]
S. Hrg. 109-25
PROPOSED FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY REGARDING THE PRESIDENT'S FISCAL YEAR 2006 BUDGET FOR
THE DEPARTMENT OF ENERGY
__________
MARCH 3, 2005
Printed for the use of the
Committee on Energy and Natural Resources
______
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
PETE V. DOMENICI, New Mexico, Chairman
LARRY E. CRAIG, Idaho JEFF BINGAMAN, New Mexico
CRAIG THOMAS, Wyoming DANIEL K. AKAKA, Hawaii
LAMAR ALEXANDER, Tennessee BYRON L. DORGAN, North Dakota
LISA MURKOWSKI, Alaska RON WYDEN, Oregon
RICHARD M. BURR, North Carolina, TIM JOHNSON, South Dakota
MEL MARTINEZ, Florida MARY L. LANDRIEU, Louisiana
JAMES M. TALENT, Missouri DIANNE FEINSTEIN, California
CONRAD BURNS, Montana MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia JON S. CORZINE, New Jersey
GORDON SMITH, Oregon KEN SALAZAR, Colorado
JIM BUNNING, Kentucky
Alex Flint, Staff Director
Judith K. Pensabene, Chief Counsel
Bob Simon, Democratic Staff Director
Sam Fowler, Democratic Chief Counsel
Carole McGuire, Deputy Staff Director
C O N T E N T S
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STATEMENTS
Page
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.................. 31
Alexander, Hon. Lamar, U.S. Senator from Tennessee............... 20
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 4
Bodman, Samuel A., Secretary, Department of Energy............... 5
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 1
Salazar, Hon. Ken, U.S. Senator from Colorado.................... 3
APPENDIX
Responses to additional questions................................ 43
PROPOSED FISCAL YEAR 2006 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY
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THURSDAY, MARCH 3, 2005
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:11 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Pete V.
Domenici, chairman, presiding.
OPENING STATEMENT OF HON. PETE V. DOMENICI,
U.S. SENATOR FROM NEW MEXICO
The Chairman. First, let me say I know from the issues that
a number of Senators, pointing over here to my good friend from
Kentucky, have specific areas of questions, like the whole coal
issue. I want to make sure we get to you. So I'm going to try
very hard to stay and keep the timing, if you'll help me, Jeff,
so Senators will get a chance before we're out of time.
I'm not going to do a lot with my opening statement. I ask
that it be made a part of the record, and if there's no
objection, it will be.
I want to raise an issue which I am certain Senator
Bingaman is going to raise in his opening remarks. There are
many, many issues of significance that you have to deal with
that are very, very important. I've already told you that I
commend you on the way you're taking to this job. I think you
have a real opportunity for probably more good public service
than you ever expected.
But one of the really important institutions you know about
and we know about is Los Alamos National Laboratory. You know
what happened in an effort to solve safety and secret-leaking
problems, and we had to shut down. I'm now talking about the
contract. You expressed quite succinctly, if you change
something that's been in existence for 60 years, there's got to
be some angst, some anguish.
I think you can't leave this all up to NNSA. I think it's
very important that you involve yourself as soon as possible.
Some of the things that have been proposed are just very
discouraging to me. The University of California had Los Alamos
for a long time, and there was a lot that happened in 60 years.
But, you know, the paramount thing is it remained a great
institution, as you so aptly said. You went there because it
has this magnificent history.
Well, they were the managers, right? They were involved.
I'm almost of the opinion that these new contract specs are
almost calculated to make sure that it's very, very hard for
the University of California to get the bid, and I don't really
think that's fair.
In particular, this whole notion of setting up a new
separate corporation, you're aware of that. I don't know what
they attempted to do there, but the employees have a very hard
time understanding what that does to them. There are some other
issues that perhaps Senator Bingaman will mention that are
very, very difficult.
So I'm just asking you today if you will really pay
attention to that. You can't afford to have a huge migration of
scientists because of a contract bidding process. Now, maybe it
won't happen, but you don't want it to happen. We don't want it
to happen. So I really urge that you seriously look at this
situation. We will have our own discussion with contract
bidders on what this RFP means, and that's our prerogative.
So having said that, my other remarks have to do with other
issues that I'll take up in questions.
Senator Bingaman.
[The prepared statements of Senators Domenici and Salazar
follow:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator
From New Mexico
Good morning. I want to welcome Secretary of Energy Samuel Bodman
to the Committee this morning in his first official appearance since
his confirmation as Secretary. I am pleased you are here to discuss the
President's FY 2006 budget request for the programs of the Department
of Energy.
I am also pleased to note that the Senate has received the
nomination of Clay Sell to be the Deputy Secretary of Energy. I hope to
have his confirmation hearing very soon.
I welcome my Ranking Member, Senator Bingaman, and the members of
the committee to today's hearing. The Department of Energy has a
significant presence in New Mexico, and I know Senator Bingaman and I
will both have questions for you, Mr. Secretary.
I must say, Mr. Secretary, that the FY 2006 budget presents a real
challenge to this Committee and the Congress. The non-defense, non-
homeland security discretionary budget is held about one percent below
current funding levels.
The President's request of $24.3 billion for the Department of
Energy represents a two percent reduction--about $475 million--below
the current level. As the Congress continues its work to develop a
comprehensive national energy policy, the Administration's budget
proposals for DOE will require some careful consideration.
In his State of the Union address, President Bush singled out
nuclear power as a safe and clean source of energy and advocated more
of it. That is the first time I remember a U.S. President emphasizing
nuclear energy in a State of the Union Speech.
I am delighted to see some of the nuclear programs I helped create
receive significant support from the Administration this year.
However, for Congress to fund some of the President's priority
programs such as nuclear energy R&D, the hydrogen fuel initiative,
carbon sequestration, and Nanoscale science, for example, Congress will
have to accept some of the President's proposed funding reductions.
Senator Bingaman and I will host a coal conference next week on
March 10 to discuss coal and the challenge of developing and using coal
in an environmentally-friendly manner to help meet growing U.S. demand
for electricity. We are very interested in the President's proposals
for DOE coal programs.
I know there will be concern about programs the Administration
proposes to terminate, which include the hydropower program, and
research on oil and gas technology.
The Administration also proposes significant savings in the
environmental management area, which I know our members will want to
discuss.
I am particularly concerned that the Administration's budget would
reduce funding for the Office of Science by nearly 4 percent.
The Office of Science is the largest source of government support
for research in the physical sciences. While we are clearly in a period
of budget constraints, I question whether the proposed reductions in
physical science research activities are in the long-term interest of
the United States.
Finally, the Administration proposes significant savings in
mandatory programs under this committee's jurisdiction--about $40
million in FY 2006, but nearly $3.1 billion over five years. These
savings come from a proposal to allow Power Marketing Administrations
(PMAs) to charge up to market rates for power. This proposal has
already received much discussion by the members of this Committee.
The programs of the Department of Energy affect all our
constituents. They are important to the economic and national security
of our nation.
I am very pleased to welcome you today, Secretary Bodman. I look
forward to working with you on comprehensive national energy policy
legislation, and the nuclear weapons issues through the NNSA, which we
will not specifically discuss today.
I know we are anxious to hear your testimony and will have
questions for you Mr. Secretary. We appreciate your appearance today
after your short time on the job.
I would ask you to summarize your testimony in 10 minutes, and ask
unanimous consent to place your full written statement in the record.
I would ask my colleagues to keep any opening comments brief so we
can get to the questions and answers portion of the hearing.
I would now ask my good friend and Ranking Member, Senator
Bingaman, to make any opening statement he might wish. Then I will
rotate back and forth to members based upon the order in which they
arrived today.
Thank you. Senator Bingaman, please proceed.
______
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Mr. Chairman, and good morning to you and the members of
the committee. I'd like to welcome Energy Secretary Bodman. It is good
to see you again, Mr. Secretary. I look forward to our conversation
this morning.
The Department of Energy is responsible for a very large number of
programs. Their reach extends from nuclear weapons research and nuclear
waste disposal to power marketing administration and renewable energy.
Even if this hearing were to last all day--and I hope that won't be the
case--we would barely scratch the surface of the Energy budget.
With this in mind, I will be focusing only on a few issues, ones
that I feel are important to Colorado and to the United States.
Specifically, I will be asking questions that target our country's path
forward to energy independence.
As you are well aware, Mr. Secretary, the National Renewable Energy
Laboratory in Colorado is important not only to Colorado but to the
whole country. Research in laboratories like NREL will drive our future
energy strategy. While you have only been on the job for a short while,
I would like to take this chance to commend you for your personal
dedication to funding that laboratory and the work that goes on there.
Mr. Secretary, I am sure we are both in agreement that if the
United States could meet its energy demands without relying on foreign
oil, the benefits would be enormous. For starters, we would
significantly reduce the trade deficit, since money used to purchase
fuel stocks would stay within our borders. Domestically produced energy
would create more American jobs. In fact, the Union of Concerned
Scientists has recently released a report stating that if only 10% of
our energy demands came from renewable sources, this would create
91,000 new jobs and would save industrial, business, and home energy
consumers $28.1 billion dollars. From a national security standpoint,
reduced demand for oil from the Middle East would significantly
diminish the power of oppressive regimes in that region. And since
America will not be able to achieve energy independence without a
significant contribution from renewable sources like biomass or wind
power, the environment would benefit substantially as well.
Given the tremendous benefits our nation would reap on a path
towards energy independence, I can not understand why the value of
renewable energy is repeatedly sold short by this administration. I am
very concerned about the economic models used by DOE to determine the
costs of instituting a renewable portfolio standard, because I believe
those costs are being grossly misrepresented.
Mr. Secretary, in the DOE economic models, your estimates are based
on numbers that simply do not hold up to inspection. The DOE budget
request, volume 3, page 26, states that the estimated benefits due to
the projected Energy Efficiency and Renewable Energy portfolio are
based on the Energy Information Administration's (EIA's) Annual Energy
Outlook 2004 Reference Case. By this model, the price of a barrel of
oil in 2003 dollars is $35 in 2004, drops to $25 by 2010, and then
slowly rises to $30 dollars in 2025. These forecast prices would be
laughable if the repercussions for our nation's future were not so
serious. The average price for a barrel of oil was approximately $41 in
2004, and prices are above $50 per barrel even as we speak. Some
economists now speculate there may be a new floor for oil prices at $40
per barrel. Similarly, the EIA model for natural gas prices is also too
low to be credible. Our nation deserves an analysis based on a
realistic economic model and I will be asking you to provide me with
that analysis.
The reason the economic model is so important to me--and so
important to the country--is that a wrong model can cause the nation's
energy priorities to be misplaced. A wrong model can be used to support
incorrect decisions, allowing the President to cut programs that need
more funding, and allowing him to continue to fund programs that should
be cut. I believe that the economic model being used by your agency
needs to be put through the wringer, so to speak, in order that this
committee and the American public can get a better sense of the
advantages that renewable energy sources will provide.
Mr. Secretary, I would like to thank you in advance for your candor
in answering this committee's questions here today.
STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR
FROM NEW MEXICO
Senator Bingaman. Thank you very much, Mr. Chairman. First,
I welcome the Secretary and I appreciate his visit to our State
last week, and I know it was very well received at both of our
national laboratories in particular. There are very serious
concerns about various parts of the budget, and I'll raise
those in questions.
Let me just underscore the issue that Senator Domenici
raised; that is, this contract competition process that's been
put in place there at Los Alamos. The way the process is now
structured, as I understand it, it is designed to essentially
ensure that whoever wins the contract, the employees at Los
Alamos can no longer continue to be employed with the
University of California and can no longer continue to receive
the benefits that they have been entitled to under the
University of California pension system.
There's been a decision made within the Department of
Energy to essentially require that any bidding be done by a
separate corporation, and that there be a stand-alone pension
system put in place for that location, a site-specific pension
system.
To my mind, this sort of undercuts the overall purpose of
the contracting idea in the first place. The whole idea behind
having a competition, as I understood it, was this was seen as
a way to strengthen the laboratory, to make it more of a
contributor to our national security. I'm concerned that the
effect of this competition is to destabilize the laboratory,
and it is to cause many of the most talented people there to
look seriously at moving to some other location or some other
employer, and that would be very unfortunate, as I see it.
This is an issue that requires attention by you if
anything's going to change. I think it's well on its way, and
you're obviously fairly new to your position. But I think it
would be a shame to just see it play out the way it now appears
to be playing out, because it seems to me that if it does play
out the way it's slated to play out, it's going to have very
adverse consequences for the laboratory.
So I raise that and I look forward to any comments you have
on it, or any chance we have in the future to visit on it, and
any opportunity you see for any of us here in Congress to be
helpful in this process, because, as I say, I'm seriously
worried about the impact of the competition process on this
laboratory.
Thank you very much, Mr. Chairman.
The Chairman. Thank you, Senator Bingaman.
Now we're going to proceed and have the Secretary give his
statement. Thank you for coming, and would you abbreviate as
much as you can? Your statement will be made a part of the
record, and I thank you again.
STATEMENT OF HON. SAMUEL A. BODMAN, SECRETARY,
DEPARTMENT OF ENERGY
Secretary Bodman. Thank you, Mr. Chairman. It's a privilege
to be here. I have a brief statement, and then I would like to
make a comment on both your remarks as well as Senator
Bingaman's. I'm very pleased to be here and I thank the
committee for offering me this opportunity.
On February 2, the President in his State of the Union
address underscored the need to restrain spending in order to
sustain our economic prosperity. This has been much in the news
since that time. Of the more than 150 reductions, reforms, and
terminations in the non-defense discretionary programs in the
President's 2006 budget, six are DOE programs.
These include the termination of the nuclear energy plant
optimization program; the nuclear energy research initiative;
hydropower and oil and gas research and development programs;
reduced spending for environmental management; and a reform of
the power marketing administration electrical rates.
All are topics that I've had conversations with this
committee about in the past. I look forward to working with the
committee in order to achieve the savings that are described in
these proposals.
At $23.4 billion, the Department's 2006 budget is $475
million below the 2005 appropriation, and it therefore will
contribute to the President's goal of reducing our deficit.
Overall, it's a 2-percent reduction from 2005. About $8.3
billion of the 2006 request is for energy, science, and other
programs within the jurisdiction of this committee.
Over the past 4 years, improvements in the management of
the Department through the President's management agenda
increased our ability to deliver tangible results through our
various programs. An example is reducing the high volume cost
of automotive fuel cells from $275 per kilowatt in 2002 down to
the approximately $200 per kilowatt in 2004, using the
processes developed in partnership with the national labs. This
number has got to get to $50 a kilowatt in order to have
something that's commercially viable, but we're starting to
move into that range.
We've also made progress in our efforts to ensure that the
nuclear power remains part of the Nation's fuel mix. In 2006,
we propose to accelerate efforts to promote near-term
construction of new nuclear power plant designs in the United
States. We're also working internationally to develop advanced
nuclear technologies to take us to the next level in terms of
efficiency, reliability, and security.
The long-term viability of nuclear power requires
environmentally sound management of high-level radioactive
waste and spent nuclear fuel generated from nuclear power
plants. Therefore, the Department in the last 2 years has
transformed the focus of our civilian radioactive waste
management program from scientific research to construction of
a permanent nuclear waste repository.
In addition to nuclear research, we're focusing resources
on other new technologies to meet future energy and
environmental challenges. These are investments in
transformative technologies that will change the way we use and
produce energy.
We're pursuing a path toward a hydrogen economy with
affordable zero emissions fuel cell vehicles, abundant sources
of production, and the safe storage and transportation of
hydrogen fuel. The Department is developing carbon
sequestration, which when used in conjunction with advanced
power production technologies, could help reduce the
environmental impact of coal-fired power generation.
We're also contributing to the effort known as ITER, or the
International Thermonuclear Experimental Reactor. This is an
international effort to pursue the promise of clean, safe,
renewable, and commercially available fusion energy by the
middle of this century, very long term, but it's one of these
things that's so good we can't, in my judgment, afford not to
be a participant.
The strong investment that the Department continues to make
in advanced, cutting-edge science enables us to explore the
possibilities of fusion and hydrogen to add strong options to
the Nation's energy portfolio. The DOE budget request charts a
focused course of investment for the Nation's future. I feel
both excited and personally privileged to have the opportunity
of leading this Department to fulfill the vision that the
President has laid out for the year 2006 and beyond.
If I may, Mr. Chairman, before concluding, I would just
give you the commitment that I will certainly involve myself in
the Los Alamos pension question that both you and Senator
Bingaman have asked about. I have already spoken at length to
the director of NNSA about this, and I am due to meet--I think
it's next week, but soon--in an appropriate way with the
chairman of the board that will be doing the selection, to talk
about the RFP.
I can tell you, Senator Bingaman, that the goal of the RFP
was to try to level the playing field, and not to try to
exclude anyone. So the reasons for the various features in the
proposal were not to exclude anyone, but to include anyone.
That was the goal, and to the extent that sometimes when one
designs these things, you can have unintended consequences, to
the extent that that's what has occurred here, you have my
commitment, sir, that I will certainly look into it and do my
best to see to it that we have a fair process.
Mr. Chairman, that concludes my remarks.
[The prepared statement of Secretary Bodman follows:]
Prepared Statement of Hon. Samuel W. Bodman, Secretary,
Department of Energy
Good Morning, Mr. Chairman and Members of the Committee. I am
pleased to appear before you today to discuss the President's FY 2006
budget request for the Department of Energy (DOE).
Before I address the highlights of our FY 2006 budget request I
want to take us back to the President's February 2nd State of the Union
Address. In his address to the nation the President underscored the
need to restrain spending in order to sustain our economic prosperity.
It is important that total discretionary and non-security spending be
held to the levels proposed in the FY 2006 Budget to achieve the
President's goal to cut the budget deficit in half by 2009. Overall,
the FY 2006 Budget includes more than 150 reductions, reforms, and
terminations in non-defense discretionary programs, of which six are
DOE programs. These include termination of Nuclear Energy Plant
Optimization, Nuclear Energy Research Initiative, Hydropower and Oil
and Gas research and development programs; reduced funding for
Environmental Management; and reform of the Power Marketing
Administrations' electricity rates. We look forward to working with you
to achieve these savings.
At $23.4 billion the Department's FY 2006 budget is $475 million
below the FY 2005 appropriation contributing to the President's deficit
reduction goal Overall, this is a two percent reduction from FY 2005--
savings that reflect DOE's commitment to improved management,
streamlined operations and results-driven performance. In the past four
years, the Department has excelled to rank among the top Federal
agencies in meeting the challenges of the President's Management
Agenda. Funding decisions in the FY 2006 budget were driven by
performance and measures of program effectiveness to achieve the goals
set forth in the Department's Strategic Plan consistent with the goals
of the President's Management Agenda. Owing in part to the successful
implementation of these management initiatives, this budget is an
investment formulated to deliver results in its four strategic mission
areas: Defense, Energy, Science and the Environment.
Over the past four years, improvements in the management of the
Department increase our ability to deliver tangible results throughout
our various programs. An example is the progress made to reduce the
high-volume cost of automotive fuel cells from $275 per kilowatt in
2002 to $200 per kilowatt in 2004, using innovative processes developed
in partnership with the national laboratories and fuel cell developers
toward a goal of $50 per kilowatt
The Department has also made progress in its effort to ensure that
nuclear power remains part of the nation's fuel mix. We have sharpened
efforts to develop advanced nuclear energy technologies by focusing on
the fundamental research and development challenges necessary to
establish the viability of advanced nuclear energy technologies. This
includes the development of advanced fuel cycle technologies to
significantly improve fuel performance, energy utilization, and
proliferation resistance for nuclear reactors. In FY 2006, we propose
to accelerate efforts to promote near-term construction of new nuclear
power plant designs in the United States. We are also working
internationally to develop advanced nuclear technologies to take us to
the next level in terms of efficiency, reliability, and security.
The long-term viability of nuclear power requires environmentally
sound management of high-level radioactive waste and spent nuclear fuel
generated from nuclear power plants. Therefore, in parallel with our
efforts to expand nuclear power generation, the Department in the last
two years has successfully transformed the focus of our Civilian
Radioactive Waste Management Program from scientific research to
construction of a permanent nuclear waste repository. The transition
was the result of the 2002 recommendation by the President and approval
by Congress to designate Yucca Mountain, Nevada, as the site for the
nation's permanent nuclear waste repository.
In addition to advanced nuclear research, we are focusing our
resources on other new technologies to meet future energy and
environmental challenges. These are investments in transformative
technologies that will change the way we use and produce energy. We are
pursuing a path toward a ``hydrogen economy''--with affordable zero
emissions fuel cell vehicles, abundant sources of production, and the
safe storage and transportation of hydrogen
The Department is developing carbon sequestration which, when used
in conjunction with advanced power production technologies, could help
ensure that this country's 250-year-coal reserves can be used with
dramatic reductions in emissions of air pollutants. Further, we are
contributing to the international effort, known as the International
Thermonuclear Experimental Reactor (ITER), as the next step toward
producing clean, safe, renewable, and commercially available fusion
energy near the middle of this century. The strong investment the
Department continues to make to advance cutting-edge science has
enabled us to explore the possibilities of fusion and exploit the
potential of hydrogen to add strong options to the nation's energy
portfolio.
THE FY 2006 BUDGET REQUEST
The Department's FY 2006 budget totals $23.4 billion, of which $8.3
billion is for energy, science and all other programs within the
jurisdiction of this Committee. Knowing the Committee's strong interest
in all of the Department's programs, I would first like to address the
overall priorities used to formulate the FY 2006 budget.
The FY 2006 budget proposal that was submitted to Congress is a
balanced and responsible portfolio of important investments for U.S.
national and energy security that:
Meets the requirements of the Nuclear Posture Review--The
budget includes $6.6 billion for weapons activities, a 0.7
percent increase above the FY 2005 appropriation. The request
supports scheduled research and development, maintenance and
evaluation, and certification for the nuclear weapons stockpile
as supported by the Nuclear Posture Review. I am pleased to
report that for eight consecutive years, the Secretaries of
Defense and Energy have reported to the President that the
nuclear weapons stockpile remains safe, secure and reliable. I
will join the Secretary of Defense soon in my first assessment
of the state of our nuclear stockpile.
Proposes an aggressive nuclear nonproliferation agenda--The
FY 2006 budget includes $1.6 billion for defense nuclear
nonproliferation activities, a 15 percent increase above the FY
2005 appropriation. Projects include shutting down two
plutonium reactors in Seversk, Russia by 2008, completing
security upgrades in Russia by 2008, expanding the Megaports
program, and expanding research and development to improve
materials detection. All these efforts are directly related to
homeland protection. This increase demonstrates the President's
commitment to prevent, contain, and roll back the proliferation
of nuclear weapons-usable materials, technology, and know-how.
Secures and safeguards nuclear materials--The budget
includes $1.4 billion for safeguards and security activities to
ensure protection for all nuclear weapons facilities,
scientific laboratories and facilities, and nuclear waste
material at our environmental cleanup sites.
Continues progress on the Yucca Mountain nuclear waste
repository--The budget provides $651 million to support the
completion of the application process that precedes issuance of
construction authorization for the Yucca Mountain project.
Maintains the accelerated environmental cleanup program--The
FY 2006 budget proposes $6.5 billion within the Environment
Management program to continue to meet the accelerated schedule
for cleanup of contaminated sites left behind by Cold War-era
nuclear development. The Department has cleaned up 76 of the
107 sites to date. By the end of FY 2006, a number of
additional sites will close including Rocky Flats, CO, and
Fernald and Mound in Ohio.
Sustains important scientific investments--The budget
includes $3.5 billion for Science activities, including
continued operation of DOE's scientific facilities, completion
of the construction of the most intense pulsed neutron beams in
the world known as the Spallation Neutron Source, support for
scientific supercomputing, nanoscale research centers, and
basic research in genomics and hydrogen.
Capitalizes on emerging opportunities in nuclear, fossil and
renewable energy and energy efficiency--The budget includes
$2.6 billion for energy resource programs to enable a reliable,
secure and affordable supply of energy for our Nation's growing
economy, while doing so in an environmentally responsible way.
SAFEGUARDS AND SECURITY THROUGHOUT THE DEPARTMENT
Securing our Nation's nuclear weapons, weapons-usable materials,
information, and infrastructure from harm, theft or compromise and
safeguarding complex wide DOE workers is one of the Department's
highest funding priorities. That job has an impact on every program in
the Department of Energy, and it has become more difficult and costly
as a result of the increased post-9/11 threat to nuclear warheads and
associated fissile materials.
The FY 2006 budget request ensures implementation of the 2003
Design Basis Threat (DBT) requirements and postures the Department to
respond to the emerging specificity of the 2004 DBT requirements. The
2004 DBT, approved in October 2004, established the high-level
safeguards and security requirements from which the security scope of
each specific DOE site is being finalized. As we implement 2003 DBT
requirements by the end of FY 2006, we will ensure that the specific
actions are consistent with the 2004 DBT requirements so we can meet
our goal to implement the 2004 DBT by FY 2008. Funds in FY 2006 will be
used, among other things, to upgrade protective forces weapons,
training and equipment; fortify storage structures to withstand
explosive impacts; improve earlier detection and assessment of
intrusion; consolidate nuclear material; and install additional delay
mechanisms and barriers around critical facilities in order to protect
our facilities against an evolving threat. Let me be clear, we will do
what needs to be done to sustain our protective force readiness and our
ability to secure the complex.
ENERGY PROGRAMS
The Department's $2.6 billion request for energy resource programs
features investments focused on making current forms of energy more
reliable, secure, efficient, and environmentally friendly; and develops
long-term energy solutions to help reduce America's dependence on
foreign energy sources. The Department's FY 2006 energy resources
budget maintains the priorities established in the President's National
Energy Policy. The budget continues initiatives in hydrogen use and
production, electricity reliability, and advanced coal and nuclear
power technologies. Investments in these pivotal areas honor a
commitment to strengthen the Nation's energy security for the near-term
and for generations to come.
As part of the President's FY 2006 Budget, the Administration
proposes several tax incentives to spur the use of clean renewable
energy and energy-efficient technologies. Consistent with the
President's National Energy Policy, the tax incentives include credits
for the purchase of hybrid and fuel-cell vehicles, residential solar
heating systems, energy produced from landfill gas, electricity
produced from alternative energy sources such as wind and biomass, and
combined heat and power systems.
I join President Bush in calling on Congress to pass energy
legislation While many of the initiatives in the National Energy Policy
have been implemented, legislation is needed to modernize and improve
our electricity grid, reduce our reliance on foreign sources of energy,
increase conservation, improve energy efficiency, and expand the use of
new technologies and renewable energy sources.
Throughout DOE's energy and science programs is an emphasis on
hydrogen-related research and development. The FY 2006 DOE budget
request includes $257 million to continue the five-year $1.2 billion
Hydrogen Fuel Initiative announced by the President in February 2003.
Hydrogen is an attractive energy choice for the future because it can
be produced from domestic sources and would produce virtually no
pollution or greenhouse gases. Spearheading the President's Hydrogen
Fuel Initiative is the Department's Office of Energy Efficiency and
Renewable Energy. In FY 2006, funding for DOE hydrogen activities is
requested for high-risk, high-payoff basic research in technologies to
produce, store, and distribute hydrogen for use in fuel cell vehicles,
electricity generation, and other applications. The FY 2006 budget
request for DOE's Hydrogen Fuel Initiative activities includes the
following four program areas:
Energy Efficiency and Renewable Energy, $183 million;
Nuclear Energy, $20 million;
Fossil Energy, $22 million; and
Science, $33 million
The FY 2006 budget request will support the acceleration of
hydrogen development in production and delivery research and
development and systems analysis with the goal of meeting the 2010
technical targets identified in the DOE Hydrogen Posture Plan and
Multi-year Research, Development and Demonstration Plan. This lays out
the Department's plan for successfully integrating and implementing
technology research, development, and demonstration activities needed
to cost-effectively produce, store, and distribute hydrogen for use in
fuel cell vehicles and electricity generation.
ENERGY EFFICIENCY AND RENEWABLE ENERGY
The request for the Department's Energy Efficiency and Renewable
Energy programs is $1.2 billion. In addition to increases for hydrogen
technologies, the $354 million renewable energy budget emphasizes
development of low-wind speed technologies, advancements in solar
energy including concentrating solar power systems, and geothermal
technology development. Research in hydropower technology has advanced
and can now be adopted by industry. Therefore, the budget proposes to
eliminate the Hydropower Program in FY 2006 and transfer the results of
program research, development and demonstration to industry.
The budget proposes $847 million for energy efficiency activities
including fuel cell activities that support the President's Hydrogen
Fuel Initiative and FreedomCAR, and efficiency of buildings to include
lighting, windows and space conditioning research and development. The
FY 2006 budget request proposes to decrease efforts aimed at energy-
intensive industries and focus instead on the successful completion of
existing projects with the highest potential future energy efficiency
and environmental benefits. New projects will be selected based on
their potential to significantly reduce energy intensity and must
demonstrate that they would otherwise not be undertaken without federal
research and development support.
The budget continues its strong commitment to assist low-income
citizens through the Weatherization Assistance program. Since 2001, the
Weatherization Assistance Program has helped 117,000 more low-income
families than would have otherwise received assistance. In the FY 2006
budget request, $230 million is requested to weatherize more than
92,000 homes in 2006 and leverage resources from other state, local and
private sector entities sufficient to weatherize approximately 100,000
additional homes. This method of implementing conservation through
proven energy savings measures helps reduce reliance on energy imports.
NUCLEAR ENERGY, SCIENCE AND TECHNOLOGY
The FY 2006 budget request includes $511 million for nuclear energy
programs to expand the development of advanced nuclear energy
technology. Nuclear power, which generates 20 percent of the
electricity in the United States, is a significant component of a
balanced, clean energy portfolio. It is relatively inexpensive, safe,
and versatile and contributes to reducing the nation's reliance on
foreign energy.
The Department has intensified its efforts to develop advanced
nuclear energy technologies by addressing the fundamental research and
development needed to establish a viable advanced nuclear energy
system. The FY 2006 budget requests $45 million for the Generation IV
Nuclear Energy Systems Initiative to expand research and development
and cooperation with our international partners to develop next-
generation reactor and fuel cycle systems that are a significant leap
in economic performance, safety, and proliferation-resistance.
The FY 2006 budget request will also bring us closer to the reality
of constructing the next generation of nuclear power plants in the
United States. With a request of $56 million, the Nuclear Power 2010
program will be able to complete early site permit (ESP) demonstration
projects, focus on documenting and recommending future ESP applicants,
and prepare guidance for the construction, operation and license
application This will help enhance U.S. energy supply diversity and
energy security.
The Advanced Fuel Cycle Initiative, with a request of $70 million,
will complement the mission of the Nuclear Nonproliferation program
through the development of new technologies that significantly reduce
accumulated plutonium in civilian spent fuel, thus reducing the threat
of nuclear proliferation. Moreover, this technology can be deployed to
support the operation of current nuclear power plants to achieve a
significant reduction in the amount of high-level radioactive waste
requiring geologic disposal.
FOSSIL ENERGY
The FY 2006 budget request includes $491 million for fossil energy
research and development activities. Within this request is $351
million for Coal and Other Power Systems research reflecting the
importance of domestic coal resources to the nation's energy future.
America has a 250-year supply of coal that fuels more than half of our
domestic electricity generation. Just as coal helped make America the
world's foremost industrial power over the past two centuries, it will
continue to be an important part of our national economy in the 21st
century and beyond. The key is technology. Within the coal request is
$68 million for the Clean Coal Power Initiative (CCPI), a key component
of the National Energy Policy. The CCPI is a cooperative, cost-shared
program between government and industry to rapidly demonstrate emerging
technologies in coal-based power generation and to accelerate their
commercialization. The FutureGen project, which is part of the CCPI,
will establish the capability and feasibility of co-producing
electricity and hydrogen from coal with essentially zero emissions. A
critical component of the FutureGen project will be the demonstration
of technologies that sequester carbon emissions associated with coal
power generation.
The FY 2006 budget request includes $18 million for FutureGen but
also proposes an advance appropriation of $257 million from prior year
clean coal project balances, to be made available in FY 2007, to
provide the Federal share of FutureGen for several years. The budget
also increases research and development in clean coal technologies that
are integral to the FutureGen concept, such as Integrated Gasification
Combined Cycle systems, carbon sequestration, and next-generation
turbines. Another major aspect of advanced power systems is fuel cell
research and development. These activities offer the potential to meet
peak electricity demand in a cost-effective manner, without the need
for capital-intensive, central station generation capacity or costly
investments in transmission and distribution. The Solid-State
Electricity Conversion Alliance (SECA) is DOE's major initiative for
stationary fuel cell development. The goal is to create a solid oxide
fuel cell (3-10 kilowatt) that can be mass-produced in modular form at
relatively low cost.
The Sequestration Research and Development program is part of the
President's Climate Change Technology Program, where $67 million is
being requested in the FY 2006 budget. The $22 million funding increase
above the FY 2005 appropriation will ensure that the program will be
able to test sequestration technologies and infrastructure concepts
needed to successfully deploy these technologies in the most important
U.S. regions. The FY 2006 budget request will also sustain core
research and development needed for successful carbon capture, storage
and monitoring. The most promising approaches will be tested at larger
scale.
The FY 2006 budget request includes $20 million for the cost of
orderly termination of the Oil and Gas technology programs. The
decision to terminate these programs reflects a strategic assessment of
the programs' technical effectiveness, as measured by the Program
Assessment and Rating Tool (PART), compared to other fossil energy
programs that are more efficient and technically viable. This is in
line with our commitment to deliver results for the American taxpayer.
The focus in FY 2006 will be to conduct the orderly termination of
these programs and I look forward to achieving this efficiency for the
taxpayers. Funding requested in the FY 2006 budget will be used to
fulfill legal obligations incurred in the termination process.
In addition to Fossil Energy Research and Development, the Fossil
Energy program request includes $166 million to continue storage site
maintenance, operations, security and drawdown readiness activities of
the Strategic Petroleum Reserve (SPR). The inventory of the SPR will
reach 700 million barrels by mid-calendar year 2005. An inventory of
700 million barrels will provide the equivalent of 58 days of net
import protection. In FY 2006, the continued operation and readiness of
the Northeast Home Heating Oil Reserve will be sustained using
carryover balances available from prior years. The budget requests $19
million for Naval Petroleum and Oil Shale Reserves (NPR) to provide for
operation and maintenance of NPR-2 in California and NPR-3 in Wyoming,
and closeout activities relating to NPR-1 in California. The Elk Hills
School Lands Fund payment to the State of California continues with a
request of new budget authority of $48 million, in addition to an
advance appropriation of $36 million included in the FY 2005 Interior
Appropriations Act.
ELECTRICITY AND ENERGY ASSURANCE
The need to modernize our country's aging electric infrastructure
is paramount to our national and energy security. This was underscored
by the East Coast and Midwest blackout of August 2003 which left
millions of Americans in the dark and cost the Nation billions of
dollars. The FY 2006 budget request seeks $96 million for national
efforts to modernize and expand our electric delivery system, and
ensure reliable, robust electricity transmission
Also within the request is $45 million for High Temperature
Superconductivity research and development to bring the tremendous
efficiency and capacity advantages of superconductive materials to
electric power transmission applications. Funding of $6 million is
requested for GridWise research and development activities to modernize
the Nation's electric infrastructure by upgrading software to employ
real time controls at the local level In addition, $5 million is
requested for GridWorks research and development activities to
integrate advanced hardware technologies into platform systems
necessary for control, communication and information sharing.
POWER MARKETING ADMINISTRATIONS
The Administration makes several proposals associated with this
budget to improve the performance of the Power Marketing
Administrations (PMA) by removing unnecessary government intervention
and allowing the PMAs to operating in a more business-like efficient
manner.
The FY 2006 budget request proposes to reclassify receipts that are
currently deposited to the Treasury and are collected based on
appropriations for PMA expenses. The budget proposes that these
receipts directly offset appropriations requested for the program
direction and operation and maintenance activities of the Southeastern,
Southwestern, and Western Area Power Administrations. This change will
allow the PMAs to operate on a more business-like and efficient manner.
In addition, the budget proposes to reclassify receipts to directly
fund the hydropower portions of the Corps of Engineers (Corps) and
Bureau of Reclamation (BuRec) operations and maintenance expenses.
Currently the PMAs collect receipts based on appropriations to the
Corps and BuRec for these activities. Directly funded activities will
include short-lived capital investments typically considered
maintenance. Direct funding will enable the Corps and BuRec to perform
needed maintenance and small rehabilitation projects in a more timely
manner. The Administration proposes the direct financing of BuRec's
hydropower research and development activities by Bonneville and
Western, the primary beneficiaries of the program.
The Administration proposes to very gradually bring PMA electricity
rates closer to average market rates throughout the country. This will
accelerate recovery of taxpayer subsidies and repayment of PMA debt
owed to Treasury, while creating a more level playing field for the
wholesale power market. In addition, we propose to clarify the
liabilities that count toward the Bonneville Power Administration's
statutory cap on borrowing so that all debt-like transactions count,
which will restore meaning to the debt cap. The Budget proposes to
increase BPA's debt ceiling by $200 million in 2009, which exceeds
BPA's estimate of the additional transactions that would count toward
its cap.''
SCIENCE
The $3.5 billion FY 2006 budget request for Science programs
continues important research activities, completes construction of the
Spallation Neutron Source, and increases support for best performing
activities that can provide the broadest benefits to society. When
combined with the significant science expenditures throughout the
complex, the Department of Energy is the largest federal supporter of
the physical sciences. The FY 2006 budget request is a strong
investment that will help enable us to maintain America's leadership
position in the world scientific community.
The FY 2006 budget request of $1.4 billion for the Basic Energy
Sciences (BES) program is a $41 million increase above the FY 2005
appropriation. The request includes $43 million for the operation of
four nanoscale science research centers located at Oak Ridge, Argonne,
Lawrence Berkeley, and Sandia/Los Alamos National Laboratories. These
centers are designed to promote rapid advances in the promising areas
of nanoscale science and are part of the DOE contribution to the
Administration's Nanotechnology Initiative.
The request for Basic Energy Sciences includes $42 million to
complete construction of the Spallation Neutron Source (SNS) at Oak
Ridge National Laboratory and $107 million to begin operation of the
facility in FY 2006. The SNS will provide the most intense pulsed
neutron beams in the world for scientific research and industrial
development. Neutron-scattering research used for example to research
the structure of materials, on the scale of the SNS holds enormous
potential for improving our quality of life such as making stronger,
lighter plastic products. This type of research has already been
applied to make improvements on jets; credit cards; pocket calculators;
compact discs, computer disks, and magnetic recording tapes; shatter-
proof windshields; adjustable seats; and satellite weather information
for forecasts.
The Basic Energy Sciences program also includes $33 million in FY
2006 for a portion of the President's Hydrogen Fuel Initiative. This
basic research program investigates the potential of a hydrogen economy
and is based on detailed findings and research directions identified by
the scientific community and DOE applied programs. All research awards
are based on the results of peer reviews that assess past performance
and the quality of the hydrogen research and development proposals.
The FY 2006 budget request proposes to support Nuclear Physics
activities at $371 million which continues research and operation of
facilities at the Thomas Jefferson National Accelerator Facility in
Newport News, VA, and the Relativistic Heavy Ion Collider at Brookhaven
National Laboratory, NY.
High Energy Physics activities continue with a $714 million budget
request in FY 2006. Funding will support the facilities at Fermilab,
IL, $304 million, and the Stanford Linear Accelerator Center (SLAC),
CA, $144 million. Both facilities will operate at an increased rate,
affording scientific users a combined total of 9,760 hours of operation
or a 26.8% increase from FY 2005.
The FY 2006 budget requests $207 million for Advanced Scientific
Computing Research (ASCR) to continue U.S. leadership in high
performance supercomputing, networking and software development. The FY
2006 budget request initiates a new activity to allow Scientific
Discovery Through Advanced Computing (SciDAC) teams to evaluate new
computer architectures as tools for science. In addition, the budget
will support two competitively selected SciDAC institutes at
universities that can become high-end computing centers of excellence.
The FY 2006 budget request includes $456 million for Biological and
Environmental Research to continue fundamental, innovative, peer-
reviewed research leading to discoveries in the Life Sciences, Climate
Change Research, Environmental Remediation, and Medical Applications
and Measurement Science. In FY 2006, a $20 million increase is provided
for genomics research for imaging and characterization of complex
microbial communities for energy and environmental applications.
The budget request includes $291 million for Fusion Energy
programs, which seek to study plasmas, the fourth state of matter, and
understand and control the process of fusion that can produce an
enormous release of energy. The budget request includes $46 million to
begin U.S. contributions to the $5 billion cost shared International
Thermonuclear Experimental Reactor (ITER), an international burning
plasma experiment that may ultimately lead to a fusion power plant.
When the President announced that the United States would participate
in the project, he noted that ``the results of ITER will advance the
effort to produce clean, safe, renewable, and commercially available
fusion energy by the middle of this century.'' The FY 2006 budget
request for ITER assumes that international partners reach a timely
site decision and would be used to fund the first year of equipment
fabrication for the United States' in-kind contributions to this
important partnership.
The FY 2006 budget request also reflects participation by the
Office of Science in multi-year budget planning. Expanding the budget
horizon to a five-year profile enables the Office of Science to
evaluate its programs, activities, and progress toward meeting both
near and mid-term goals in a multi-year context, assures budgeting
discipline and allows for a broader, larger scale to long-term
planning.
ENVIRONMENTAL MANAGEMENT
The Administration's commitment to the environment includes taking
action to address the environmental legacy of our past work,
particularly building the nuclear weapons complex that helped win the
Cold War.
In 2002, DOE took an aggressive approach to transform the
Environmental Management program from managing risk to one of reducing
and eliminating risk to human health and the environment. The
Department reassessed its cleanup strategies and methods and announced
an accelerated cleanup strategy.
The total FY 2006 budget request for Environmental Management
programs is $6.5 billion. As cleanup is completed at sites such as
Rocky Flats, Fernald and Mound, it makes sense that the Environmental
Management budget will decline. The FY 2006 budget request is $548
million lower than the FY 2005 adjusted appropriation of $7.1 billion.
The total FY 2006 Environmental Management budget request includes
$941 million for the non-defense Environmental Management and Uranium
Enrichment Decontamination and Decommissioning activities within the
jurisdiction of this Committee. Included in the budget request are
design and construction activities for a Depleted Uranium Hexafluoride
(DUF6) Facility at both the Portsmouth, OH, and Paducah, KY, sites.
The Office of Environmental Management has included five-year
budget plans in the FY 2006 Budget. These plans will provide budgetary
rigor and an out-year context to programmatic decisions, and along with
the Office of Science five year plans, will serve as a model for the
rest of the DOE programs, which will develop five year budget plans for
the FY 2007 budget submission This effort assures budgeting discipline
and allows for a broader, larger scale to long-term planning.
CIVILIAN RADIOACTIVE WASTE MANAGEMENT
Consistent with the President's National Energy Policy, the
Administration's FY 2006 budget request maintains the commitment to
develop a permanent nuclear waste repository. The Department is
requesting $651 million to meet the commitment to establish a geologic
repository at the Yucca Mountain site in Nevada. The FY 2006 budget
request supports the completion of the application process that will
lead to the issuance of construction authorization. In preparation for
the eventual construction of the repository, the FY 2006 budget request
also includes $85 million to continue to develop and manage the
transportation capability required to transport spent nuclear fuel and
high level radioactive waste from specified locations to the
repository.
LEGACY MANAGEMENT
The total request for Legacy Management activities in FY 2006 is
$79 million. The program conducts the long-term stewardship tasks of
managing land, structures, facilities, and records, and overseeing the
Department's pensions and post retirement benefits for former
contractor employees after site closure. The FY 2006 budget reflects an
increase of $3 million, to address higher than estimated requirements
for post-retirement life, medical, and long-term disability benefits.
The request also includes $31 million to support working with the
closure site contractors to enhance the delivery system for pension and
health benefits for closure sites. The Department considers the role
planned for community and worker transition activities to be completed,
and no additional funding has been requested.
ENVIRONMENT, SAFETY AND HEALTH
The FY 2006 budget request includes $107 million for Environment,
Safety and Health activities to directly support the mission of DOE to
ensure that the safety and health of the DOE workforce and members of
the public, and the protection of the environment are integrated into
all DOE activities. FY 2006 funding will continue to provide for the
establishment of DOE policy to ensure safe and secure workspace across
the complex and establish and enhance the scientific basis for worker
protection policy and standards. The budget includes $14 million for
the Radiation Effects Research Foundation and $6 million for Marshall
Islands activities. The FY 2006 budget request reflects the transfer of
Part D Energy Employee Occupational Illness Compensation Act program
activities to the Department of Labor. Prior to the transfer to the
Department of Labor, DOE was responsible for assisting nuclear weapons
workers who worked at DOE facilities that developed work-related
illnesses as a result of exposure to radiation and toxic chemicals. In
FY 2006, within available funds, DOE will continue to support the
Department of Labor's implementation of Part E, which includes the
responsibilities transferred from DOE in FY 2005, by conducting record
search activities in the field as well as provide site survey data.
CONCLUSION
The Department's FY 2006 budget request proposes a series of
investments enabling DOE to meet critical Presidential commitments and
at the same time reflects prudent fiscal responsibility. The
efficiencies identified in this request reflect the return on the
Department's efforts in the last four years to strengthen management
and accountability for the American taxpayer. This request charts a
focused course of investment for the nation's future--one guided by a
cohesive mission and targeted performance metrics. I am both excited
and privileged to have the opportunity to lead this Department to
fulfill the vision the President has laid out for us in FY 2006 and
beyond. Mr. Chairman, I also look forward to working with you and the
Members of this Committee on how we can best accomplish our mission of
providing for national and energy security.
Thank you. This concludes my formal statement. I would be pleased
to answer any questions you may have at this time.
The Chairman. Thank you very much. I want to look at
nuclear power for a little bit, because I am very optimistic
that there's a significant movement of a positive nature,
motivated both by the fact that the world seems to be more
interested in nuclear power than ever, China buying 25 reactors
and the like, and we're closer and closer to moving forward.
But, Mr. Secretary, I have real concerns about the pattern
of delay in the leadership of NP 2010. Now, you know what NP
2010 is, and it's an exciting program to expedite and cut the
time for construction and licenses as contrasted with site
licensing for nuclear power plants. We happen to be partners
with two consortia, Dominion and New Start, which have a very
large array of nuclear power plants.
We've made awards to two of these private sector consortia,
and these moneys have been 5 months--it's 5 months since it was
culminated, and the money hasn't been dispersed. Now, I know
you know that you can't leave things like this to the ordinary
bureaucracy to nitpick instead of understanding that things
have to get done in areas that are very, very important.
If we can't show the same utilities that are doing what
they're doing that we're interested, then I think we have
little chance of the dream that we're talking about. So I need
you to tell us that using your business acumen on getting
things done, that you will look at this and see why it's taken
so long, which now is not so important because it's done, but
why we can't get it done expeditiously so that we move with the
terrific spade work that has already been done to get the
consortia together, to get the program together. Can you
address that, please?
Secretary Bodman. Yes, sir. I expect that there will be
other questions from other Senators related to the timeliness
with which we in the Energy Department accomplish our desired
missions and goals. I can't give you the details about this
particular issue. I can tell you that I will certainly be happy
to look into it, and I will be happy to give you a response.
[The information follows:]
The Department is moving with diligence to issue the Nuclear Power
2010 cooperative agreements and associated FY 2005 funding to the
industry. It is our firm desire to keep the momentum on new nuclear
plants progressing toward deployment.
The Dominion Energy decision to change its selected reactor
technology to the General Electric ESBWR design caused the Department
and industry to re-evaluate project cost, cost share, and annual
funding in both the Dominion Energy and NuStart projects. This is due
in part to the fact that the GE ESBWR reactor design is part of both
projects. In addition, NuStart requested additional FY 2005 funds to
accelerate the Westinghouse AP-1000 work scope. Both of these
conditions required re-submittal of detailed cost information by both
reactor vendors to the Department. In addition, intellectual property
rights terms and conditions required complex and lengthy negotiation
with the reactor vendors. The Department reached agreement on the terms
and conditions for the cooperative agreements during the week ending
March 11, 2005. The Department expects to issue the cooperative
agreement to Dominion Energy by the end of March and to NuStart in
April 2005.
Secretary Bodman. The Department means well. The Department
is doing its best in its own way, I believe. There is not a
conscious effort to withhold funds or to miss deadlines. But we
somehow seem to have that as a part of the fabric of the way we
do business, and we're going to attempt to improve that. And so
I will make that commitment to you, sir. We will certainly look
into it, both generally and specifically.
The Chairman. Well, again, I'm going to leave the rest of
my questions--if I don't get to them, I'll submit them. I'm
going to proceed with other Senators.
Senator Bingaman.
Senator Bingaman. Thank you very much, Mr. Chairman. Let me
ask about the Office of Science budget. In the strategic
highlights, which is--this is one of the volumes of the 2006
budget--on page 7 it shows a 5-year estimated projection for
the Office of Science, projecting that it'll go from $3.6
billion this fiscal year to $3.36 billion 5 years out, or in
fiscal year 2010. If you assume 3 percent inflation, the
baseline would grow to 4.17. So you could look at how much of a
shortfall we are going to have relative to where we are now
even.
This concerns me. It seems as though we are essentially
laying out a long-term plan for decreasing our investment in
science. That seems short-sighted to me, and I'm certain that
it does to you too, Mr. Secretary. I don't know how we break
out of this circumstance and start to give more priority,
particularly to physical sciences, but to all science work in
general in this country. But it just strikes me that if you see
a long-term decline in the budget of the Office of Science,
that's something that ought to concern this committee and ought
to concern the Congress generally.
Secretary Bodman. First of all, I would reiterate what I
stated in my opening remarks, sir, that we are in a very, as
you're well aware, a very stringent budget environment, and
therefore the tough judgments have been made in terms of which
parts of the Department's programs would be increased, which
part would be decreased.
There were judgments made largely focusing on homeland
security, largely focusing on the defense, the war on terror,
and the necessity of beefing up our efforts with respect to our
nuclear weapons. Hence, most of the increases went there and we
had decreases in the balance of our portfolio.
Having said that, sir, I view the responsibilities of the
Department of Energy with respect to funding, support for our
physical sciences--you mentioned sciences in general--but I
would cite, I think you're quite right in singling out the
physical sciences. Fortunately, the life sciences have received
very positive treatment, both from the Clinton administration
as well as from the Bush administration. We've seen sizable
increases in the National Institutes of Health and other life
science efforts.
I think it has gradually become clear to even those
responsible for the life sciences that you can't make the kind
of progress you need there without efforts and progress in the
physical sciences. So this is a serious matter.
I was not involved in the discussions, you're aware of
that, with respect to this budget. I will certainly look at it
and try to apply my own judgments as to where we allocate our
resources. I can tell you that with respect to the science
budget, significant reductions were made in programs that were
and are important in the sciences budget, but they were made
intelligently, and still will enable us to provide the kind of
leadership in the physical sciences that this country has
enjoyed in the past.
Senator Bingaman. Let me ask about a couple of specifics.
One is, oil and gas research and development programs are
slated for termination. That seems short-sighted to me. Some of
that work is done in our state at New Mexico Tech. It's work
that's intended to help independent petroleum producers get
maximum production off of wells in this country.
One other, which is a very small item, but it's just one I
wish you would pay some attention to and focus on a little, the
budget proposes to zero out the U.S.-China Cooperative Program
on Fossil Energy, which is a program to promote efficient,
clean burning of coal in China.
Now, this is a very, very small program. As I understand
it, I was fortunate to be in China last August with seven other
Senators, and I was told then that the Department of Energy was
going to have an office in China for the first time, which was
very encouraging, and that there was a great hope that we could
work with the Chinese and assist with encouraging them to do
more to move toward clean burning of coal in the great number
of power plants, coal-fired power plants that they're bringing
online. For us to zero out the funding to support this effort
just seems to me extremely short-sighted, and I wish you would
look into that. It's a very small item in the budget, but one
that I think could have a lot of benefit.
The Chairman. We'll put it in appropriations.
Secretary Bodman. If I may make a couple of quick comments
on that.
Senator Bingaman. Please go right ahead.
Secretary Bodman. In both cases, the opening remark is the
same, you know, we have tough choices to make, and so it's been
one trying to decide where we put our money to get the maximum
return.
With respect to oil and gas, frankly my understanding is,
and I would have to agree with it, that with oil at $50, the
industry is in better financial shape than it has been in many
years, and one might respectfully ask the question, does it
make sense for the Government to be funding the technical work,
even for the independents--I recognize there's a difference
between the majors and the independents--and so that was a part
of the thinking, I have to believe, in terms of making that
judgment that we've got very high energy prices--this is the
other side of the coin. There are some advantages to having
high prices in that they're doing well and they ought to be
able to spend money on research and develop these things
themselves.
Second, with respect to the Chinese cooperative program, I
have no idea. I'd be happy to look into it. I'm unaware of
that, and I'll be happy to find out more about it and get back
to you, sir.
[The information follows:]
China is a large market for U.S. Clean Coal Technologies. Bilateral
cooperation with China, maintained by the Office of Fossil Energy, is
aimed at using the bilateral relationship to minimize the impact on the
global environment as China's economy expands, while helping to
intensify the engagement of U.S. clean energy technology vendors in the
Chinese energy market.
The Office of Fossil Energy maintains technology cooperation with
China through the U.S.-China Fossil Energy Protocol, which encourages
Chinese use of U.S. Clean Coal Technologies on a government to
government basis and the U.S.-China Energy and Environmental Technology
Center (EETC). As an example of one activity under this Protocol, the
Department hosted a delegation of senior Chinese engineers and provided
a one week tutorial (at their request) on U.S. fuel cell technology.
The work under this Protocol area is progressing well.
The activity that has been zeroed out is the EETC. The EETC
maintains offices at Tulane University in New Orleans and Tsinghua
University in Beijing. The EETC is a source of information technology
and is a source of information for U.S. industry on planned clean coal
projects in China. Approximately one million dollars was appropriated
for this Center last year as a congressional earmark.
Senator Bingaman. Thank you.
The Chairman. Senator Alexander. Were you here ahead of
him? You didn't put that on here. You all made a mistake. All
right, Senator. They have it the other way. That's the only
reason I did it. Sorry.
Senator Thomas. Okay. I'll let it go.
The Chairman. I've got to be careful here. We're going to
have a Wyoming Senator who's going to be mad at me, and it will
be the staff's fault.
Senator Thomas. Well, thank you, Mr. Secretary, for being
here and taking on this job. As you know, we have spent and
continue to spend a good deal of time with respect to an energy
policy. I think most of us agree that an energy policy would
include such things as efficiency, as conservation, as
renewables, as domestic production. These are basic things that
I think we want to be there.
So as I look at it a little bit, energy efficiency research
is down some. Coal, which is our best opportunity, our largest
fossil fuel resource, to be able to convert that into more of
an environmentally sound thing, is much a part of our future.
Renewables, we have in our policy, the funding here seems
to be down a little. Clean coal, I mention again, and, you
know, we've talked a long time about FutureGen, but nothing
seems to be happening. The money's always there, but nothing's
happening.
So, in general terms, would you comment a little bit on how
consistent this budget is relative to what I think most of us
perceive to be the future of energy policy?
Secretary Bodman. Yes, sir, I'd be happy to. It strikes me
that this budget seeks to identify those areas, and exactly
those areas, whether it's coal or improved efficiency, whether
it's the hydrogen program, whether it's nuclear power, in all
of these areas where we think we get the maximum returns. And
in some cases looking at the differences between the
appropriated level and the budget or the proposed 2006 budget
is--does not look hard at what we proposed a year ago.
And so the Congress does its will and moves these numbers
around itself, and therefore, in most of these areas, I
believe, where we are proposing increases or levels that are at
least equivalent to the figures that were proposed a year----
Senator Thomas [presiding]. Well, actually, oil and gas
technology is out, energy efficiency is down, renewables are
down----
Secretary Bodman. With respect----
Senator Thomas. I don't think what you're saying is
consistent with what's in the numbers here.
Secretary Bodman. Again, I'll be happy to go back and go
through each one. Oil and gas, you're correct, sir. There's no
doubt about that, and that I can't help but restate what I
stated before to the question that Senator Bingaman asked. We
have an industry that is at record levels in terms of prices
for its products, and does it make sense----
Senator Thomas. Yes, but the role of the Energy Department
in some of those things is a little different than the role of
the commercial folks, when we're looking forward in terms of
how to do things in the long term a little bit better. So, at
any rate, I'd like you to look at that.
Secretary Bodman. Yes, sir.
Senator Thomas. Western Power, you know, the PMAs, I see
there's a look to turning that into commercial prices. These
things, of course, go basically to rural areas through non-
profits, and some people are very concerned that that would
become just a commercial kind of a thing rather than serving
those people that are difficult to reach, so that PMA change is
apparently in this budget.
Secretary Bodman. Well, with respect to the PMAs, I know
that's a topic that other Senators also will have questions
about. With respect to the PMAs, the proposal is to allow a
gradual increase in prices that over a period of time, and
reflective of a situation that will not disrupt economic
activity, but will start to move us in a direction that we
remove the subsidies that are believed to exist for all of the
PMAs, from taxpayers who do not benefit from the--from being--
--
Senator Thomas. PMAs do offset their costs, however, the
way it is currently.
At any rate, I've taken my time, sir.
Secretary Bodman. All right, sir. Thank you.
Senator Thomas. But we'll talk about it some more later.
Senator Wyden.
Senator Wyden. That's the question I want to start with. I
mean, your proposal with the PMAs is just economic poison for
our region, and we are going to block it. We have the good
fortune of having Senator Domenici strongly opposed, along with
Senator Craig and many of us on the committee.
But here's my question to you. You have the ultimate
approval over the rates of Bonneville and the PMAs, and what
I'd like is your assurance that you won't do an end-run on
Congress, and in effect go out and administratively put in
place this proposal that you have for Bonneville and the
powered marketing agencies. Can you give me that assurance this
morning that you won't do it administratively?
Secretary Bodman. Senator, I'm just an engineer, sir, and
not a lawyer. And I would tell you--and therefore, having--
speaking from that vantage point, I do not believe that I or
anybody at the Energy Department has the flexibility of doing
an end-run. That's why this is in the budget. It is our view
that this would require legislative change if we are to change
the way the PMAs do business. That's why it's in there.
It is my understanding--and my belief--I'm basically a
business man, sir, and I will see to it that we do business in
these authorities according to the law that created them,
because that is my responsibility, and I will continue to do
that while we have this discussion.
Senator Wyden. We're going to block you, Mr. Secretary.
Secretary Bodman. All right, sir.
Senator Wyden. I'll just give you that up front. And you've
told me now that you're not going to pursue it
administratively. We think that there are some concerns that
you could do it administratively. That's why I'm asking.
Let me turn to high oil prices, because yesterday oil hit
$53 a barrel, and you were quoted as saying you've got no plans
to talk to OPEC. Your exact quote was, I'll be speaking in time
with representatives of the governments of OPEC.
What's the argument for not being on the phone with them
today? People are getting clobbered by these high prices. I
hear about it at every town hall meeting. I don't understand
why you wouldn't be on the phone with OPEC pressing right now
to try to get some relief for our consumers.
Secretary Bodman. Senator Wyden, the capability of any
representative of this government to influence the members of
OPEC is limited, and it is something that has been done in the
past and will presumably be done in the future, and we will be
a part of that. I can't comment on that particular quote, but I
will tell you that I do expect to play a role, and to continue
to play a role as a part of my responsibilities here. But I
will tell you I do not control what OPEC does.
Senator Wyden. What's the argument for not pressing now?
There's no question that you can't just snap your fingers and
suddenly make them do things. But what's the argument for not
doing it today? I don't understand why there would be any
delay. I mean, why not push immediately?
Secretary Bodman. Senator Wyden, I have a lot of things on
my plate. All I can tell you is that I am aware of your views
and I will take them into account as I try to make a
determination as to how I proceed.
Senator Wyden. Well, I'm sure you have a lot on your plate,
Mr. Secretary, but this ought to be in the front of your plate,
because this is what people are concerned about, that if we
have these prices continue to escalate, we're going to see
great harm for our economy.
The last question I had on my round was about the cuts in
clean-up funding at Hanford. There's a concern that Hanford is
taking bigger cuts in the clean-up budget than is other areas,
and we would like to know what's behind that and what you'd be
willing to do about it. In fact, you're proposing to cut
overall clean-up funding at Hanford in our area by over 10
percent,* and it's a larger cut as far as we can tell than the
other sites. What would be behind that?
---------------------------------------------------------------------------
* Senator Wyden amended this figure from 7 to 8 percent to over 10
percent.
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Secretary Bodman. First of all, sir, Hanford is the largest
clean-up effort that we have. It takes a very high priority on
my time and on the time of those of us responsible for this
Department.
The proposal is in excess of $1,800,000, so it is not
something that we are ignoring. There are three reasons for the
decline. The first is that it was discovered by the new
contractor that there were incompletions in the seismic
information that they had, that based on the original design,
so they have slowed the construction progress of the
vitrification plant in order to be able to reassess the effect
of the new seismic information on the foundations. And so that
has caused and will cause a delay in the vit plant construction
effort.
Second, we've actually completed certain aspects of the
Hanford clean-up, and so that there are some reductions that
come about because of that.
And then third, there are issues where we do have a
difference of opinion with the State of Washington, with
respect to the approach that we are using with respect to the
waste incident to the reclamation program that is ongoing, or
the so-called WIR Project. And therefore, we have slowed the
spending down there in order to try to take on those things
where we are in agreement, and then hopefully we will be able
to reach agreement with the State over a period of time.
So those are the three reasons that led to the reduction,
but it's still $1,800,000, still a sizable undertaking.
Senator Wyden. My time is up. It is a bigger cut than the
other sites have faced, Mr. Secretary. And I saw in Engineering
News that you said the huge cuts in Hanford clean-up were
justified by saying that the clean-up is winding down.
But it's hard for us to see how clean-up is winding down
when none of the high-level waste from the tanks has been
processed, and the vitrification plant necessary to process the
waste hasn't even been built. So Senator Cantwell has really
led us in this effort, but the people of Oregon care a great
deal about it, and I'm going to be asking some additional
questions of the Department on this as well.
Thank you, Mr. Chairman.
Senator Craig [presiding]. Thank you.
Senator Alexander.
Senator Alexander. Thank you, Mr. Chairman. I'd like for my
statement to be a part of the record, my opening statement.
Senator Craig. Without objection.
[The prepared statement of Senator Alexander follows:]
Prepared Statement of Hon. Lamar Alexander, U.S. Senator From Tennessee
Thank you. Mr. Chairman.
I've mentioned before that we're at a major crossroads in terms of
our nation's energy security. If we continue down the current path, we
will continue to depend on foreign sources of energy, prices will
continue to rise, and our environment will continue to be polluted. We
can choose another path.
Unlike some other issues we deal with here in Washington, there are
some relatively clear solutions to our energy problems--solutions
driven by advances in science and technology, American ingenuity, and a
healthy dose of common sense.
DOE has a critical role to play in all three of these areas. Its
FY06 budget funds many of the programs that move us towards new clean
energy technologies that also improve our economic competitiveness. I
am encouraged by the fact that the FY06 budget request increases
funding for nuclear energy and some aspects of clean coal R&D, both of
which are focused on helping us reduce air pollution. On the science
side, the Department should be commended on its continued commitment to
research in areas such as hydrogen, and should be especially proud of
its sustained commitment to completing the Spallation Neutron Source, a
new national user facility in Tennessee. As the FY06 budget process
unfolds, I will be paying particular attention to 4 priority areas.
1. Strong support for our national laboratories. According to the
National Academy of Sciences, nearly \1/2\ of our nation's economic
growth since World War II can be attributed to advances in science and
technology. If we want that to continue, we need to invest in the
research that fuels those advances at places like the Oak Ridge
National Laboratory in Tennessee. This means we must make a stronger
investment in fundamental research in the physical sciences and a more
sustained commitment to regaining international leadership in advanced
scientific computing at the National Leadership Computing Facility.
2. Continued support for nuclear energy and practical solutions to
nuclear waste storage. Nuclear power-plants generate 20% of the
nation's electricity but nearly 70% of the ``emissions-free''
electricity produced annually by this country. I'd like utilities to
consider additional nuclear facilities and am glad to see that the
Department continues development of next generation nuclear power
plants. We need to create the right policy environment so DOE's
investments result in a new generation of nuclear plants in the near
future. On the issue of nuclear waste, clear leadership focus on Yucca
Mountain in needed. TVA ratepayers have paid almost $700 million into
Yucca Mountain--with no tangible return to date. Their contributions
represent approximately 2 years worth of TVA revenue from the 2003 rate
increase paid by ratepayers all over the Valley.
3. Support for clean coal technologies including coal gasification.
Tennessee and the states around it use a lot of coal to generate
electricity. The U.S. has an ample supply of coal. The vast majority of
my state is in non-attainment with federal air quality standards and
the Great Smokies Mountain National Park is the most polluted national
park in the country. To clean up our air, investment in clean coal
technologies must continue to be a priority at the Department.
4. Support for technologies that help reduce the price of natural
gas so lobs stay here in the U.S. This means funding methods to
increase domestic natural gas supplies and reduce demand through new
energy conservation solutions. I'll be introducing legislation
regarding this subject in the near future.
I have a few questions I'd like to ask Secretary Bodman regarding
some of these funding priorities.
Senator Alexander. Mr. Secretary, thank you for coming. I
have what I hope will be a constructive suggestion and a couple
of questions about specific things. I know you were not part of
making up of this budget, and I am a supporter of the
President's effort to bring some fiscal discipline to the
Federal Government.
But in line with some of the other comments that have been
made, I think it would be a grave error for the United States
to limit our spending in a way that keeps us from having
economic growth, and more than half of our new jobs since World
War II have come from advances in science and technology.
When I was Governor, I used to work hard to restrain
Medicaid spending so that we could invest more in centers of
excellence at the universities and in colleges and in schools
and in research. I would say we should be doing that here. We
were ambushed as a country by a terrorism. We're about to be
ambushed by countries who want our jobs and our money, and I
don't want to see our budget-cutting activities over the next 5
years get us on a glide path that underfunds our ability to
grow new jobs, and I know you don't either.
So what I'm suggesting is within the councils of the
administration. I hope you and the Secretary of Education and
others suggest, for example, that if we're going to only
restrain the growth of Medicaid by $12 billion--we're going to
spend $1.2 trillion on it over the next 10 years--we restrain
its growth by $12 billion over the next 10, let's restrain it
more and put more of that money into investments in research.
The Office of Science's own 20-year plan developed by this
administration would double the funding for the physical
sciences in the next 5 years, yet this budget takes it down. So
we'll do our part on this side. There are a number of Senators
on both sides of the aisle who want to see us make the proper
investments in science and technology, and I'm just encouraging
those within the administration, while you're making up the
next budgets, to help with that.
Here are two specific questions. Last year, Senator
Bingaman and I--I give him the credit--he encouraged me to go
to Japan and see the earth simulator. I did, and as a result,
all of us working together, we set about to recapture the
international lead in high-speed advanced computing. In the
Office of Science's plan, it's the No. 1 domestic priority,
second only to the international fusion project.
Yet this budget does not adequately fund our effort to try
to recapture the lead in international computing, yet we're
starting two new programs in new computing. So my question is,
why would we underfund this effort to help us get to 100
teraflops by 2006 in high-speed advanced computing? Why would
we underfund that in order to start two new programs in
computers?
Secretary Bodman. First of all, this is one of those cases,
sir, where the proposal in the budget this year is equal to or
greater than the proposal in the budget last year, and that it
was not one of trying to underfund. We've tried to make some
tough choices, but we are continuing to fund the supercomputer
at the level that we had proposed to the Congress last year,
and it is something I'm very enthused about personally.
I would also tell you, sir--as you know, from when you and
I visited in your office--you will certainly have my support.
I'm a great believer in science, and I think that's an
important component of this Department. We are, however, in
very stringent and difficult times from a budgetary standpoint.
Senator Alexander. I understand that, but I think it's
important, as I said earlier, that we've got a big budget, and
the one thing we don't want to do in the next 5 years is
underfund our ability to keep our standard of living. We're all
giving speeches about that and beginning to understand it
better right now, but the rest of the world understands we
produce a third of the money for only 5 to 6 percent of the
population. If we sit here and underfund science and technology
and education without restraining Medicaid, then we're making a
bad mistake.
My last question is, you were asked a question in your
testimony in the House about the possibility of instead of the
Department of Energy regulating the science labs, such as the
Oak Ridge National Laboratory, might not it be better to let
OSHA and the Nuclear Regulatory Commission do that sort of
regulation? Might not they be better suited for that
regulation, and might they not be more efficient in that kind
of regulation of safety and health issues at your 10 science
laboratories? I wonder if you've had a chance to think about
that since then.
Secretary Bodman. Yes, sir, I have had a chance to think
about it, and my first priority will be to improve the safety
and security powers of the individual laboratories themselves.
Before we start seeking out help, I'd rather at least make an
effort to see what we can do to improve the situation
ourselves. So I would respectfully, at least at this point in
time, like to focus on it. I think we can improve, and I would
like to see us try.
I became quite confident, having visited Los Alamos and
Sandia last week, that we will be able to continue to make
progress there. And sometimes, sir, the appearance of help in
the form of additional regulators is not what we need. What we
need to do is manage what we have today better, and that's
where I'd like to put my effort.
Senator Alexander. Well, I didn't mean additional. I meant
in lieu of for the science labs.
Thank you, Mr. Chairman, for your time.
The Chairman [presiding]. Thank you, Senator.
Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman.
Secretary Bodman, welcome officially as Secretary of Energy
to your first hearing as Secretary before this committee.
Secretary Bodman. Thank you.
Senator Cantwell. I find a little bit of irony in having
you, smart, business, MIT person coming here to try to sell
this particular committee that somehow there is something wrong
with cost-based power. But we'll get to that. And I look
forward to the challenge of seeing how you defend this
position.
But I'm assuming from your testimony this morning that you
and the administration are still pushing the reform concepts of
the power market proposal by OMB. Is that correct?
Secretary Bodman. That's correct. It's the President's
budget, ma'am, so it's not OMB, it's the President's budget.
Senator Cantwell. Okay. That probably makes it even more
clear to my constituents.
Second, are you aware of a letter that we sent on February
9 informing you that--actually, the agency--if it does
participate in the use of public funds to investigate this
proposal, that it is a violation of the Energy and Water
Appropriations Act of 1993?
My predecessors from all throughout the Northwest have been
clear for decades about this issue and this proposal, and
Senator Hatfield clearly called for outlining of any public
dollars to be used to promote or study this idea of shifting
cost-based rates to market-based rates.
Are you aware of that letter? And when can I expect a
response?
Secretary Bodman. I am aware of the letter. I can't give
you a date on the response, but you may be sure that you will
be getting a prompt response.
The essence of the response will be that the President,
under his constitutionally mandated authorities, does have the
need to do sufficient work on any topic that he chooses to make
a recommendation to the Congress on, and that the
interpretation of the law to which you refer, which has been
studied with some care over time, is interpreted to allow him
sufficient flexibility to undertake his constitutionally
mandated authority.
Senator Cantwell. I think the reason why this language is
there is because lawmakers think that you're wasting our time,
just as this particular budget proposal will waste our time as
well. I think that you will probably hear from the majority of
members of this committee that they don't support this concept.
I think we've heard from Senator Gregg that he doesn't plan on
supporting it in the budget proposal. So I think that's why
that language exists.
But let me turn to the real issue, because I think this is
what we need to get down to. First of all, the Northwest
economy has been greatly hurt. We paid $30 million in emergency
sales, ordered by the Department of Energy, for the California
crisis. We've never gotten paid for it. We have had the lack of
Federal regulators doing their job and getting us relief from
fraudulent Enron contracts that we're still being sued to pay
for.
Now this proposal, which is no more than an assault on
public power and cost-based rates, is nothing more than an
attempt to turn the lights out on the Northwest economy. Now,
our Governor was just here, and not only do we have almost
10,000 signatures from rate payers saying how much they're
going to be hurt by this, we even have evidence now of
businesses saying they don't know whether they're going to get
their financing for expansion in the Northwest, because they're
concerned about this proposed rate increase on public power
rates.
Now, I ask you, is the administration's problem with cost-
based rates? Or is the administration's problems with standing
behind some notion that somehow the Northwest is subsidized on
these rates? Because I see no Treasury transfer of dollars. I
could come up with lots of programs here that represent a
transfer of Federal dollars to specific interests. Public power
doesn't meet that.
So fundamentally it seems that the administration, in your
response to this proposal, your testimony today said that
electricity rates should be closer to market rates. The reason
why we don't want to be closer to market rates, we decided in
the 1939 Reclamation Act that this proposal of cost-based
rates, of getting power just at the cost that it takes to
produce it, was good for the Northwest economy and good for the
economy throughout America. And somehow this administration
wants to say no, you should pay more than that simply because
other people can't produce power at that rate.
So why should Northwest rate payers or rate payers in New
Mexico or anywhere else have to pay more simply because an
Enron or somebody else can charge more money? That's not the
philosophy that this Congress has had for decades since 1939.
So why do you want to change it?
Secretary Bodman. To answer the question--you asked several
questions during the course of that. To answer the question----
Senator Cantwell. That's why I'm counting on that MIT
expertise.
Secretary Bodman. I'll try to do my best, ma'am. The
administration's position on this matter is that there is a
subsidization of the PMAs by the American taxpayer, and this is
an effort to gradually change the rates so that they, over a
period of time, can approach market levels. It's as simple as
that.
Senator Cantwell. So could you please tell me how there is
a subsidization when there is no transfer of dollars from the
Treasury? How could there be a subsidization?
Secretary Bodman. I can tell you that the form of the
subsidization involves the calculation of costs as they exist
now, and it relates to the funding that was made available to
these PMAs, not the recent funding during the 1990's, but the
funding during the 1980's, 1970's, and 1960's, which was done
at sub-market rates, and when the General Accounting Office,
and when the Congressional Budget Office analyzed all of this,
they too agreed that there is a subsidization of the PMAs. And
so it's a simple matter of trying to correct what we view as a
deficiency in the economics of the system.
Senator Cantwell. Well, I know my time is up, Mr. Chairman,
but I believe the GAO report refutes the notion that BPA and
ratepayers are subsidized. In fact, I think that it shows just
the opposite. So perhaps in the next round we'll have a chance
to talk about that.
The Chairman. Thank you very much. Thank you, Mr.
Secretary.
Senator Bunning.
Senator Bunning. Thank you, Mr. Chairman. Just a couple
highlights in the DOE budget. There has been an actual 2
percent cut overall in the budget, 2 percent. If we get down
into the budget itself, I heard Senator Wyden saying that the
Hanford clean-up took a 7 to 8 percent cut. If you look at the
Paducah clean-up, we're looking at a 13 percent cut in clean-up
dollars.
Not only that, but we're having a terrible time continuing
the clean-up because of the transfer from Bechtel Jacobs to
other entities. Now we have a lawsuit preventing clean-up at
all.
So my feeling is that your budget, the DOE's budget,
cutting from $111.3 million to $98 million is unjustified. This
was supposed to be a sped-up budget. In other words, we were
going to clean it up faster. It's the first time in the history
of the Department of Energy I've ever seen a clean-up go faster
by paying less. Since I've been here, I've been here for 19
years, I've never seen us spend less and get more out of it.
The other thing at the Paducah plant is the DUF6 facility.
You have proposed a decrease of $5.1 million from $55.9
million, and we're trying to build that so we can get rid of
the waste that is on that facility.
Now, please explain to me the rationale, how you feel that
you can get more for less, and accelerate the clean-up.
Secretary Bodman. Sir, I hope it will not be the last time
that you ask me this question. I do hope that over time we can
find ways of getting a lot more for a lot less in the way we
manage our environmental affairs in this Department.
Now, with respect to Paducah, I know of your interest in
it, and I have looked at the whole range of efforts that are
ongoing at Paducah. As I said in my remarks earlier, there are
certain examples of the management of our departmental efforts
that I think fall short of standards that I would have. This is
one of them. We have had a delay beyond acceptable periods of
time in honoring or pursuing bids that have been made.
As you've pointed out, sir, we now find ourselves the
object of some lawsuits. It's something that well-intended
people have arrived at a situation that I find unacceptable.
And we will look hard at it to see if we can't make
improvements so that I do not have to take this question from
you again.
But I would tell you, sir, that with respect to the budget
that is proposed, the budget for 2006, which is the proposal
that is before you and that is being considered here today,
does accomplish that which we need to accomplish in order to
get the job done, and that unrelated to----
Senator Bunning. We have a difference of opinion, but
that's okay.
Secretary Bodman. Yes, sir.
Senator Bunning. We're going to have a lot of those for as
long as you're here, for the next 4 years.
One other thing I am dumbfounded by is that you have
removed all--everything that was in the overall comprehensive
energy package on clean coal-burning technology, the tax
credits. I know that is not specifically in your bailiwick, but
it is overall in the Energy program.
We're down to $50 million for clean coal power initiatives.
We had $2 billion in the overall energy bill last year in tax
incentives for burning clean coal. Unless we do those things,
Mr. Secretary, we are going to continue to depend on foreign
sources for not only coal and the technologies that we arrive
at, but in energy overall. We're going to be behind the 8-ball
as far as depending on foreign imported energy sources, and we
want to do just the opposite. That's why a bunch of us are
going up to ANWR this weekend to look at a natural resource in
the United States of America that could take our dependency
away from Saudi Arabia for a million barrels of oil per day
over 30 years, just that one resource.
So we have to look at coal, which whether you like it or
not, produces about 52 percent of our electric generation in
the United States. So I think it's short-sighted that we don't
spend more to develop clean coal technologies.
Secretary Bodman. I can say a couple things, if I may, sir.
First, we're great believers, I'm a great believer personally
in coal generally and in research that is focused on improving
the way we use coal. And so the clean coal power initiative,
the other related activities that are in this budget, are
something that I'm quite enthused about, and we have funded and
will continue to fund in the future.
With respect to ANWR and other fossil fuels, I will be
accompanying you, sir, on the trip this weekend, and I look
forward to learning more about ANWR and about the opportunities
for an additional source of energy of the sort you describe.
And perhaps while we're traveling, you and I can have a chance
to talk further about coal and the advantages of that.
Senator Bunning. Dress warm.
Secretary Bodman. Thank you, sir.
Senator Craig. Senator Murkowski.
The Chairman. Are you finished, Senator?
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman, and welcome,
Secretary Bodman. I too look forward to joining you on our trip
up north. I think it will be an opportunity to showcase what we
have done in Alaska over the past 30 years with regard to
exploration and development of, as Senator Bunning has
indicated, an incredible resource for us. It has been done in a
manner that highlights not only our technology, but highlights
how we are able to do it in balance with the environment, in
balance with the animals that live up there, and still provide
economic opportunity to the Inupiat, to the natives, and to
provide a resource for the rest of the country. So we're
looking forward to that.
This leads me to my question and my concern, and that is
the elimination, or the phase-out, of DOE research into
accessing the non-conventional gas resources, and further into
the technology side.
Now, you have indicated in your comments that with the
price of oil at the heights that it is, quite honestly, private
industry should be able to step forward and pursue these
technologies. We do recognize that the price of oil is at
unprecedented levels. Certainly there should be some incentives
out there.
But I go back to comments that were made by Senator
Alexander talking about certain policy decisions that we make.
We want to make sure that we continue a level of economic
growth. We want to make sure that we continue meeting the
country's energy needs. But we also want to make sure that
we're doing things responsibly environmentally. We're talking
about clean air, we're talking about emissions. You will see
when you come up north, climate change is real in Alaska. You
will see it there. We need to be addressing the technology that
allows us to adapt, that allows us to mitigate to the extent
possible.
So there are policies that will help spur this advanced
technology, whether it relates to oil or whether it relates to
natural gas. It doesn't come cheap, and we don't necessarily
see the answer in the first year.
We have been working for the past 5 years to see if we
can't commercialize gas hydrates, unconventional sources of
gas. We're looking at the potential of 32,000 trillion cubic
feet of gas hydrates up north. But this program would phase
that out.
This is an area, again, where we have the opportunity as a
nation to reduce our dependence on foreign sources of our
energy. We're already well past help when it comes to oil. But
we don't need to go there with gas, and we've got an
opportunity with gas hydrates. I want you to work with us in
that area. We need the assistance there. I want you to see the
advances that we have made.
I also want you to see what the technology has allowed us
to do with the directional drilling so we're not impacting the
tundra. The caribou don't even know that we are there. These
are the types of incentives that have come about because we
have had these programs in place, and I am hopeful that after
your visit next weekend, we can maybe sit down and look at some
of the benefits to this.
Now, I've used all my time talking, but it was important to
get that statement out. What I do want to ask of you
specifically with the gas hydrates, we need to have some
assurance that the Department of Energy understands the
importance to us of these unconventional gas sources. I would
like your assurance that not only you'd work with us there, but
that you would look at the technology that's being utilized up
north, recognize the potential for us in ANWR so that we can
develop responsibly and in a manner that works not only for the
oil companies.
We're not looking to feather the nests of the oil companies
with these incentives. We're looking to benefit the country
through the advantage of the resource and benefit the region,
my State, through sound environmental policies. So I need to
know that you're going to work with us in these two areas.
Secretary Bodman. Senator, I'm also happy to learn, and I
look forward to going and to learning. I don't know what more
to say. I would repeat that some very tough choices had to be
made in the construction of this budget. And the ones that were
made were the ones that were felt to be appropriate.
Obviously, it's now in your court, and the Congress will
decide what it wishes to do. In terms of the unconventional
energy resources, the hydrates that you mentioned, in terms of
directional drilling, I'm also happy to learn more, and I
expect to learn on this trip.
Senator Murkowski. I appreciate your open mind. Mr.
Chairman, I have one really brief question that I would like to
ask of the Secretary if I may, and this relates to our natural
gas pipeline. As you know, we were successful in enacting the
legislation. We appreciate the assistance last year in getting
the incentives moved forward.
We've had a conversation about DOE's role in moving this
project forward once we figure out the logistics of the
sponsors and what authorization they file under with FERC.
Among other things, your Department's responsibilities will
include granting the necessary authorizations, conducting
environmental rules, and really a lot of coordination with
many, many agencies.
We know that we've got to get Alaska's gas to market as
soon as possible. And in reviewing the budget, it's just not
clear to me whether DOE has requested the funding necessary to
carry out the responsibilities that your Department will have
as we move forward with the natural gas pipeline.
Secretary Bodman. We haven't, and we will need to undertake
a reprogramming in order to get the necessary budgeting
flexibility, which we will be undertaking, and I would
certainly ask for your and the help of Congress in looking
favorably on a reprogramming so we could do just what you
request.
Senator Murkowski. Okay. I'll look forward to discussing it
with you on the trip, because there are some items that need to
move quicker than others. Certainly the coordinated effort
amongst the agencies is something that we need to key on very
quickly, so I'll look forward to doing that. And as Senator
Bunning said, dress warm.
Secretary Bodman. Thank you.
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Akaka.
Senator Craig. I'm next.
Senator Akaka. Thank you very much.
The Chairman. Senator Craig was here. That's all right. You
were here much longer, so let's do that. Go ahead, Senator
Craig, and then we'll go to Senator Akaka.
Senator Craig. Well, I do appreciate that accommodation. I
need to get to the floor to get involved in the current debate.
So Danny, thank you for the accommodation.
Mr. Secretary, I will not be going to ANWR. I know that
climate change has warmed Alaska, but not enough. It will still
be 30-plus below on the ANWR, and so I'll plan to go in the
spring when the mosquitoes are out.
Secretary Bodman. We'll give you a report, sir.
Senator Craig. I trust you will. The President proposes and
the Congress disposes, and we are so disposed not to move our
PMAs to market-based rates, and we will not do that. I believe
that. The chairman of the Budget Committee agrees.
Let me tell you why. Bonneville Power repays the Federal
Treasury for all of the power-related investments made in the
Federal hydro system. BPA has made its Treasury payments in
full on time for 21 straight years. In the last 3 years, the
Bonneville Power Administration has prepaid the Treasury just
over $1 billion.
The claims that Bonneville are subsidized rest on the
difference between the average interest rate of Bonneville's
appropriated Treasury debt, and the long-term market interest
rates that prevailed during the 1980's and the 1990's. That was
a discussion that you and Senator Cantwell had.
According to the GAO, in 1996, the Bonneville Power
Administration appropriated Treasury debt was being repaid at
an average rate of 3.5 percent. Prevailing Treasury rates were
9 percent.
The region disagreed that the difference in interest rates
that prevailed at the time represented a subsidy. As many of
the Northwest pointed out at the time, it is like the bank
claiming that it subsidized a homeowner who has a 6 percent
fixed rate mortgage in an 8 percent mortgage market. I think
there has to be some reality brought to this subsidy
discussion.
But in order to put the perennial subsidy argument to rest,
which we thought we had, the Northwest congressional delegation
negotiated a refinancing arrangement for Bonneville's debt with
the Office of Management and Budget, Bonneville, and the
Treasury Department. The agreement was first introduced in 1994
by Senators Hatfield and Representative DeFazio, and finally
enacted in 1996.
Here's how it worked. The net present value of the stream
of payments that Bonneville owed was calculated at the time.
The interest rate was arbitrarily increased to a market rate of
7.1 percent, which means we are repaying an average market rate
today, above average compared to the rate today. The principal
amount at the end of 1996 was in fact reduced from $6.7 billion
to $4.1 billion.
The effect of increasing the interest rates and reducing
the principal amount was that the net present value of the
stream of payments the Treasury would receive remained exactly
the same. In other words, the taxpayer was no better or worse
off as a result of the transaction, with one important
exception: Bonneville and the region's ratepayers agreed to pay
an additional $100 million earlier in the new repayment stream,
thus leaving taxpayers $100 million better off than they were
before refinancing legislation was passed.
The $100 million benefited and was confirmed by OMB. The
Federal Government also confirmed that this refinancing
resolved the issue of proposed or supposed Bonneville Power
subsidy.
Here's what a former Secretary of Energy said in 1994:
Benefits to the Government and this legislation are that it
provides a minimum $100 million increase in the present value
of Bonneville's debt service payments to the U.S. Treasury. The
increase represents agreement between ratepayers and the
government to resolve subsidy criticism for outstanding
appropriate repayment obligation.
Bonneville's customers recognized that recurring subsidy
criticism must be addressed once and for all because of the
risk they posed to Bonneville's financial stability and rate
competitiveness. The legislation included assurances to
ratepayers that the government will not increase the rate
payment obligation in the future.
My message to you today is to pick up the phone and call
OMB and ask them to read this, and stop the silly argument that
the way they're going to increase the flow of revenue to the
Federal Government is to dispute this agreement that we all
came together on in 1994, Mr. Secretary, to deal with the
criticism that still rebounds today.
There is no subsidy today. It has been effectively handled,
and Bonneville has advanced payments by almost $1 billion. So
the ratepayers of the region, I believe, have met their
obligation. That's my frustration.
Last, the chairman and I are very interested in new
generation nuclear power. We get pushed back, we're moving
ahead, we hope to get cooperation from you certainly. That's
going to be extremely valuable in the future. Everybody's
talking about, including Wall Street and investors, that the
name of game in town is clean technology. One of the greatest
forms of clean technology today is nuclear, and yet to build
that new generation facility, to create the efficiencies, to do
the kind of things we want to do, which also embody the
President's hydrogen proposal and hydrogen program, are within
that.
So we trust that you'll be with us in that, that we won't
continue to get the progressive push back from OMB simply
because they're playing a numbers game in direct opposition to
the language being talked about by the administration and by
this committee and by this Congress collectively.
Thank you.
The Chairman. Mr. Secretary, I don't know if you have
enough time to answer, but nonetheless----
Secretary Bodman. I could just say----
Senator Craig. The Bonneville doesn't need to be
addressed----
Secretary Bodman. I just would say----
Senator Craig. I'm just simply saying, go back and read the
content of the 1994 law. It's real. Let's don't play this game
anymore.
Secretary Bodman. I understand and I will certainly go back
and read the 1994 law. I have not done that, and I will
certainly do it. The statements I made before stand, sir.
With respect to NGNP, there is a serious effort on the part
of this Department to do the research that is necessary to
select a process for the eventual NGNP program. We just signed
yesterday a Gen IV--a day before yesterday, I guess it was--a
Gen IV agreement among five countries that will call for joint
research related to a number of nuclear efforts.
I would be remiss, however, if I did not state that my
understanding--I have not had the discussions about this
personally--but my understanding is that there is a good deal
of hesitation and concern about the $2 billion, plus or minus,
price tag on building an NGNP process plant in order to
undertake this program. It's a very expensive effort, and the
first thing will be to select the right process.
And that's what the 2006--I think it's $45 million that's
in there, a portion of which will be committed to the selection
of a process. It's been suggested we talk to the National
Academy of Sciences in order to get some help on that or to get
verification that we've got the right approach.
But I would be remiss if I did not say that at least my
understanding is there is some concern about whether we've got
the wherewithal in order to deal with a $2 billion price tag
for the NGNP process.
The Chairman. Thank you, Mr. Secretary.
Senator Akaka.
Senator Akaka. Thank you very much, Mr. Chairman. Mr.
Chairman, I ask that my full statement be included in the
record.
[The prepared statement of Senator Akaka follows:]
Prepared Statement of Hon. Daniel K. Akaka, U.S. Senator From Hawaii
Thank you, Mr. Chairman, for calling this timely hearing on the
Department of Energy's FY 2006 budget. I realize that the President has
pledged to cut the nation's record-high budget deficit of $427 billion
in half by 2009. But to do so at the expense of discretionary programs,
especially at the expense of critical energy programs, is not a wise
decision given our high prices for crude oil, growing demand for
energy, and current energy portfolio.
The federal budget is a template by which priorities are drawn and
I have concerns about those priorities. This year, the discretionary
part of the nation's budget will receive a decrease of about one-
percent, the first real-dollar decrease in over 20 years.
The Department of Energy's Fiscal Year 2006 budget request of $23.4
billion would add money for national security, hydrogen research,
nuclear power and clean coal technologies, while cutting spending on
science, environmental and conservation programs. The result would be a
2 percent reduction in discretionary spending for the Department of
Energy, a decrease of over $475 million dollars!
As you know, I have been a strong supporter of the DOE science and
energy programs. I am disturbed that the FY 2006 request for the
important programs in Science, including the Department's contribution
to the U.S. Global Change Research Program, are cut by nearly 4 percent
from the FY 2005 appropriations level.
I am extremely concerned about the elimination of Natural Gas
Technologies programs. I authored legislation that shaped the Gas
Hydrates program and have long supported the pursuit of Gas Hydrates
research and development. Gas Hydrates represent a vast potential
source of clean energy and warrant an intensified research and
development effort. The Administration's request has scaled back
enacted levels consistently since FY 2002, and no funds are requested
in FY 2006.
The notable bright spots are increases for Hydrogen research and
nuclear security, through the National Nuclear Security Administration.
The NNSA budget is 2.5 percent ($233.3 million) more than in 2005.
Within NNSA, the Defense Nuclear Nonproliferation subgroup is targeted
for a 15.1 percent budget increase. I am pleased to see this commitment
to national and international nuclear security. I look forward to
working with you on securing sealed nuclear sources that can be used as
material for `dirty bombs.'
Thank you Mr. Chairman. I have some questions that I will ask
during the question and answer period.
Senator Akaka. Mr. Secretary, thank you for being here, for
taking on this huge challenge, and I realize you didn't
participate in the drafting of this budget, but I'd like to
discuss some of the issues.
The fiscal year 2006 DOE budget has a budget structure
change relating to the off-site source recovery program. All of
the National Nuclear Security Administration, or NNSA, and DOE
programs related to nuclear materials removal and radioactive
source security and recovery have been consolidated into a new
unit to support the new global threat reduction initiative,
GTRI, announced by former Secretary Abraham.
GTRI includes activities transferred from the Office of
Environmental Management, the nonproliferation and
international security and international nuclear materials
protection and cooperation programs, and the off-site source
recovery program.
Specifically, Mr. Secretary, the U.S. radiological threat
reduction subprogram of the GTRI recovers and stores excess and
unwanted sealed nuclear sources to reduce the threat of such
sources being used in radiological dispersal devices.
I am pleased that the DOE budget request for USRTR budget
reflects a meaningful increase from $7.5 million to $12.75
million for fiscal year 2006, and that the NNSA has moved
aggressively in the past year to identify and recover such
nuclear materials.
At a September 2004 hearing before this committee, the
Director of the Office of Commercial Disposition Office of
Environmental Management, Ms. Christine Gelles, stated that DOE
had located the responsibility for designating a permanent
disposal facility for greater than Class C waste to
environmental management. And yet, I cannot find evidence of
this funding.
My first question, is there funding in the DOE fiscal year
2006 budget for the activities needed to identify a permanent
repository for GTCC nuclear waste, such as an environmental
impact statement, and for the facility or contract for
disposal?
Secretary Bodman. Yes, sir, there is funding. Are you
speaking of Yucca Mountain, sir?
Senator Akaka. Yes.
Secretary Bodman. Which is meant to be the permanent
repository, and there is funding for the Yucca Mountain
repository that is in the 2006 budget.
Senator Akaka. Yes, well it doesn't only have to pertain to
Yucca Mountain. It could be for other facilities.
Secretary Bodman. I'm a little confused by the question, so
maybe if we could----
Senator Akaka. Yes, well if----
Secretary Bodman. If we can maybe deal with that off-line,
I'd be happy to try to be helpful in providing the information
that you want.
[The information follows:]
FUNDING FOR A PERMANENT REPOSITORY FOR GTCC NUCLEAR WASTE
DOE did not request funding in the FY 2006 Budget for the Greater-
Than-Class C (GTCC) waste disposal activities because carryover funds
(approximately $1.5 million) from prior years are sufficient to fund
the ongoing GTCC Environmental Impact Statement (EIS) activities
through FY 2006. DOE plans to request funds in the FY 2007 Budget to
complete the EIS and to begin implementation of the Record of Decision
for GTCC disposal.
Senator Akaka. Yes. I know I mentioned so many different
agencies here and their relationships. I would appreciate a
response from you on this.
Secretary Bodman. It shall be done, sir.
Senator Akaka. In writing, yes.
Second, can you please confirm, Mr. Secretary, for the
record that the responsibility lies within or with
environmental management, and comment on DOE's progress and
plans to identify a process and site for these wastes? So for
the record if you'll provide that for us, I'd certainly
appreciate that.
Secretary Bodman. I would be happy to provide for it to the
extent that--again, I'm a little unclear as to the exact nature
of the question. There is in the budget--and in an organization
separate from environmental management, in the so-called
Radioactive Waste Office, where there is significant funding
that--that is geared to the creation of a permanent repository
for nuclear waste. That is something that we devote a good deal
of time, money and effort to.
[The information follows:]
RESPONSIBILITY FOR FUNDING FOR A PERMANENT REPOSITORY FOR GTCC NUCLEAR
WASTE COMMENTS ON PROGRESS AND PLANS TO IDENTIFY A PROCESS AND SITE FOR
THESE WASTES
The Office of Environmental Management is responsible for
completing the Greater-Than-Class C (GTCC) Environmental Impact
Statement (EIS) and determining how the Department will meet its
responsibilities for disposing of GTCC waste. Current efforts are
focused on performing the necessary National Environmental Policy Act
(NEPA) analyses, including the development of an EIS. This spring, we
expect to issue an Advance Notice of Intent, which will request
comments from the public and interested agencies about the proposed
EIS, the preliminary range of disposal alternatives, and the potential
issues related to DOE's decisions for this category of waste. In
addition, we are in the process of developing updated inventories of
commercial GTCC waste and comparable DOE waste, which is essential for
analyzing potential disposal options. We also have entered into
discussions with the U.S. Environmental Protection Agency and the U.S.
Nuclear Regulatory Commission about their potential participation in
the EIS as cooperating agencies. Upon completion of the EIS, DOE will
issue a Record of Decision documenting how it intends to meet its
responsibilities to dispose of GTCC low-level waste. The entire EIS
process usually requires 1-1/2 to 2 years from the issuance of the
formal Notice of Intent (which is expected to be issued later in 2005)
to the issuance of a Record of Decision.
Secretary Bodman. There are other issues with respect to
the environmental management's efforts to deal with the legacy
wastes that occurred in various sites, including the State of
Washington, including Idaho, including Tennessee, Ohio, and so
forth. And so that's the province of the environmental
management folks. And there is funding in the budget to focus
on that as well.
Senator Akaka. Thank you, Mr. Bodman.
Mr. Chairman, my time has expired. I have other questions,
but I'll submit them for the record.
The Chairman. Okay. If we don't have time, will you submit
them for the record?
Senator Akaka. Yes.
The Chairman. Senator Smith, I think it's your turn.
Senator Smith. Thank you, Mr. Chairman. Secretary Bodman,
welcome. Thank you, Senator. You've probably noticed that there
are a lot of Northwest Senators on this committee.
Secretary Bodman. I have taken that into account, sir, yes,
I have.
Senator Smith. You'll also recall that in our first visit
when you were nominated, you and I reviewed the history of
public power in the Pacific Northwest and how much a
cornerstone it was to the economy of the Pacific Northwest. I
won't reiterate what I was going to do--reiterate what Senator
Craig indicated, but there is no subsidy anymore. This was
all--to the degree there was, was resolved with the Hatfield
agreement. It is the statutory law of this country.
Notwithstanding that, President Bush isn't alone. When I
got here, President Clinton made a run at the same thing,
because it is much misunderstood apparently by OMB. We defeated
it then and we must defeat it now, and I believe we already
have. So I hope you're not counting on those market rates for
your budget, because they're not going to happen.
The Northwest Power and Conservation Council has estimated
that the proposal to have BPA go to market-based rates would
result in a 65 percent rate increase for customers in the
Pacific Northwest. Did OMB to your knowledge do any
calculations on what an impact of such a rate increase would be
on industries in the Pacific Northwest? Was any thought given
to that, and on unemployment rates that are already too high in
Washington, Oregon, and Idaho?
Secretary Bodman. I can't speak to the question of
unemployment rates, but OMB did do calculations with respect to
the impact on the ratepayers of your region, sir. They did do
that. Their numbers were significantly below the number you
just quoted.
Senator Smith. You know, I'm a businessman in a commodity
business. I understand supply and demand and I understand
markets very well. But there is a real misunderstanding of
markets to think that there is a market in the Pacific
Northwest when it comes to power production. Bonneville Power
is a public entity that finances endless claims on its
treasury, to say nothing of its obligation to the treasury that
it not only meets, but exceeds. But it has obligations to the
tribes in terms of treaties, it has obligations to Canada in
terms of the management of the river. It has obligations to
more public entities than we've got time this morning to
indicate.
So the notion that it is producing market-based power is
ridiculous. It is serving endless public needs. To the degree
that you want us to go to a California-style spot market for
rates in addition to that just simply hits our region with a
cost that misunderstands the law, and certainly, I think,
devalues the people of that region and misunderstands as well
their history.
Frankly, because we are current on all of our BPA payments
and the interest rates are at market rates, as I understand,
we've even prepaid Treasury debt, can you tell me of any other
public works project in U.S. history that has returned this
much money to the U.S. Treasury? Do you know of any public
works project that's got a rate of return like BPA does to the
Treasury?
Secretary Bodman. I haven't tried to do a history of all
the public works projects. I'd be happy to take a look at it.
Senator Smith. You won't find any.
Secretary Bodman. There is no effort, sir, to demean or
degrade the citizens of any region. This was strictly an effort
to reconcile what is deemed to be a difference in the rates of
subsidy among the different PMAs that exist, in our view.
Senator Smith. Well, this was harmful to President Clinton
when he tried it in our region, and it's harmful to President
Bush. I sure hope that they'll back away from this, the sooner
the better. I think the Congress has already backed away from
it in terms of the budget that will be brought to the Senate
floor.
Do you know, is any other region of the country making as
much investment in new transmission as the Pacific Northwest?
Secretary Bodman. I don't have the figures by region, sir,
so I can't speak to it. I'd be happy to get those for you if
that's useful.
[The information follows:]
Yes, there appear to be other regions of the country that are
making as much new investment in transmission as the Pacific Northwest,
relative to the value of their existing transmission assets. These
regions include the Electric Reliability Council of Texas and the
California Independent System Operator. However, the existing Federal
data sources are not comprehensive enough to draw strong conclusions
about regional patterns or trends in major transmission investment.
Senator Smith. Well, part of the problem with the
California crisis that occurred a few years ago was much
related not just to production but to transmission. In response
to that, BPA has tried mightily to add to transmission, and
obviously that takes borrowing authority. Yet I understand that
the administration wants to restrict needed transmission
upgrades, in other words, reduce their borrowing authority.
If that's done, we're simply not going to get third-party
financing arrangements with those kinds of borrowing ceilings,
and it just hurts the future, it really does cloud it. So I
hope that that can be rethought as well.
You've probably heard enough on this issue today, but I
hope you have a sense of what kind of a wall the administration
is running into in the Congress.
Secretary Bodman. I do have a sense of it, sir.
Senator Smith. Thank you.
The Chairman. Did you have another round or----
Senator Bunning. Mr. Chairman, I will just submit some
questions to the Secretary.
Senator Smith. Mr. Chairman, I just wanted to ask one more
thing.
The Chairman. Please do.
Senator Smith. Mr. Secretary, can you commit that the
Department will not attempt to force BPA to charge market-based
rates administratively in violation of current law?
Secretary Bodman. Senator, there is no way that this
Department will do anything in violation of current law.
Senator Smith. That's a good answer. Thank you.
The Chairman. Well, I'm going to excuse myself for 2
minutes and turn it over to you, and I will return because I
have a number of questions.
I just want to make an observation about PMAs. It has
nothing to do with merits. You will soon be participating in
another round of budget discussions, and I think you should
look at the history of submissions of PMA reform and what's
happened.
Now, it's good that Presidents continue to submit policy
matters that are significant. But I think you ought to think
through and make a point that if you're going to continue to
put them in your budget when they're not going to happen, then
we're just jeopardizing programs that we know we need, because
we can't get the savings. If we're expected to meet a goal,
you're just taking that amount, and in a sense saying, we all
know it's not doable, but as a matter of policy we want to put
it in there, but then we have to cut all the other programs.
I can tell you this is reminiscent of President Nixon
sending us proposals--he started it and then over and over
again--to privatize a nuclear enrichment program. They finally
stopped submitting it and then we did it. It took 26 years.
So in the meantime, every President put it in and we were
expected to make the money from the sale, and I'm very
thankful. That was the biggest privatization done in about 8
years, and I did it with the help of a Senator from Kentucky. I
just give you an analogy that sooner or later it gets
counterproductive for your Department and expenditures.
Now, Senator Cantwell, if you will preside and then I will
return shortly and we won't take much longer, Mr. Secretary.
Secretary Bodman. Thank you.
Senator Cantwell. Thank you, Mr. Chairman, and thank you
for your comments as well about power markets. But I think, Mr.
Bodman, I think your break-off from our last discussion, which
I wanted to pick up on, has adequately been addressed by the
exchange between you and my colleagues from the Northwest. So I
think I'll stop on the subsidy point, but we will certainly be
looking for your response to that issue.
Let me, if I could, turn to the Hanford budget issue, and
the fact that the DOE cuts to Hanford seem to be, I would say,
at odds with our ongoing commitment for clean-up, given the
tri-party agreement that we have between the State of
Washington and DOE. Can you explain to me why Hanford received
more than half the cuts in the Environmental Management budget
despite the fact that it continues to be really at the early
stages of clean-up? Why would we juxtapose to Oak Ridge or
Rocky Flats, you know, over half of those cuts come from the
Hanford budget?
Secretary Bodman. First, Senator, it is the intention of
this Department to comply with the tri-party agreement that you
alluded to in your question.
Senator Cantwell. And since you just brought that up, could
you clarify that also means cleaning up 99 percent of the tank
waste?
Secretary Bodman. That's correct. That's correct, and
that's what the commitment is and will be and we will tend to
honor that.
Senator Cantwell. Thank you.
Secretary Bodman. With respect to the reductions, I think I
alluded to those before, but they were one that certain
components, certain parts of the project have actually been
completed--we have seen a modest part of the reduction is due
to the fact that there have been some completed portions.
The largest part of the reduction is related to the
slowdown that has occurred in the building and the construction
and the need to redesign the foundations of the vitrification
plant during the process of construction. It is not a
circumstance that I as an engineer am very happy with, but we
have what we have.
And apparently we have a situation where there was either
inadequate attention given to or inadequate information
available during the original design of this plant, and
therefore there is a process ongoing of reverifying and
rechecking all of the foundation calculations related to the
vit plant. And therefore, that process has slowed down the
construction. I don't like it, you don't like it, but those are
the facts. It seems to me to be not an unintelligent way to
proceed given the circumstances that we are now faced with.
And then third, there are differences, as you're aware,
between the Department's view and the State of Washington's
view of the WIR situation, and therefore, that in and of itself
has caused a delay in certain aspects of it. And so we have
limited funds, and so we have decided to put those funds where
we have a higher degree of certainty, where we do have
agreement, and where we don't have the same sort of problems.
We are continuing to spend over $1,800,000 if Congress
approves this budget. It is not an inconsequential amount of
money. It remains the biggest program that we have, and it will
certainly have my attention any time we're spending that kind
of money. It needs to have the attention of the Secretary and
it will have.
Senator Cantwell. Thank you, Mr. Secretary. I think our new
Governor is most anxious to work with you on the settlement of
the WIR issues and move ahead, and certainly we will want to
follow up with the discussion on the vit plant and commitment
on the budget.
But I appreciate your----
Secretary Bodman. If I could just say, I did meet your
Governor when she was in town earlier this week, and we did
have a brief discussion of it, and I expressed to her the same
commitment that we will do our very best to try to honor this.
Senator Cantwell. Last year, Congress gave the Department
of Energy the broad authority to reclassify waste at Savannah
River and at the Idaho National Lab as well, the Engineering
Environmental Lab. So basically it was the ability to leave
tank waste in the tanks. Now, that wasn't something I agreed
with. In fact, I thought it was a big mistake.
Earlier, this week, the National Academy of Science issued
a thoughtful report that basically confirmed, I think, what we
were saying here, those of us who objected. The report rejected
the notion that DOE should be making these decisions, and this
was something Senator Alexander and others had brought up that
basically that DOE shouldn't be making these decisions, and
basically called for the Nuclear Regulatory Commission or EPA
to have the final say on this issue. This was something of high
importance that basically ended up going through the Armed
Services Committee, a committee that, I believe, this committee
thought didn't have jurisdiction to make that decision, and was
stuck into the Armed Services' budget.
So I don't know if you're familiar with the National
Academy of Science report, but would you be willing to work
with us on developing a new regulatory regime as it relates to
waste replacement and the authority that was, I think, rushed
through, I should say, in last year's Defense Authorization
bill?
Secretary Bodman. I am, Senator, familiar with the National
Academy's report in that I know there was a report. I have not
yet read it. I think it just came out yesterday or the day
before, so it's really fresh off the presses, and it--the
schedule did not permit me enough time to read the report prior
to this testimony.
I will certainly plan to read the report and take into
account any recommendation that the Academy makes. I have to
say that in the absence of that--again, without the benefit of
that--I have looked at the agreements that were struck with
respect to giving the Department, or giving the Secretary, I
believe, the authority of making a judgment with respect to the
nature of the WIR waste, and allowing the Department to proceed
with the clean-up.
I would hope that over time perhaps we could develop a
level of trust that we're going to take this matter seriously,
we do take it seriously, and that we could find a way to
accommodate the wishes of you, of your Governor, and your
constituents. And I will certainly do that.
Senator Cantwell. I don't think it's really about the
wishes of an individual state. Trust is an interesting word,
and I think we all want to have it, but this is about science.
What we want are not members who want to cut a deal on a budget
so that they can say, yeah, we want more money and so we'll go
with expedited clean-up, we'll leave tank waste in the tanks.
We want science to be based--we want our decisions to be made
on what that science says.
And right now, the National Academy of Sciences also agrees
that this was not a well-thought-out strategy to give the
Secretary of Energy the ability to just decide this. This is an
important decision that has to be considered by a variety of
organizations that have been involved.
I think one of the things you'll find quite interesting is
when you look at the regime of definitions of high-level waste,
and how the change in one definition then triggers the
requirements or their lack of requirements on clean-up or
transportation of those wastes, you'll see how complex this
regime of definitions is.
So I would just say to you in reading that National Academy
of Science report, it's not whether someone trusts the
Secretary of Energy. It's whether our decisions should be based
on sound science. So I hope you'll take that into
consideration.
Secretary Bodman. Senator, I have a doctorate in science
from Massachusetts Institute of Technology. I believe in
science and I understand the need for having sound science in
reaching conclusions. I will certainly take advantage of that
background as I go about my work.
Senator Cantwell. Well, as I have said to the chairman
before, I'm hoping at some point in time we will get an Energy
Secretary for life that will then proceed in cleaning up
Hanford, and certainly your science background would be very
helpful in that.
We continue to have these debates about science, and at
this juncture, we continue to debate issues that I think that
really should be resolved. And in this particular case, the
level of tank waste, we want to have a decision that everybody
agrees on because of that science. So I appreciate your
efforts.
The Chairman. Well, I heard the desire to have a Secretary
for life to solve that problem out there. I was just thinking
about the Bible and that person would have to be Methuselah,
it's going to take so long at the current rate and with all the
arguments we've got.
I frankly believe, not necessarily in contradiction to
what's been said by the distinguished Senator, but I think
we've made some terrific progress in the last 3 years on clean-
up, the kind we're talking about. If we were to continue on the
previous path, this comes out of the DOE defense budget, we'd
have taken up a third of the budget out here in about 15 years
to do the clean-up in the country, and it can't be done. We've
got to figure out some practical way.
I urge that along with pure science that you also continue
to have in mind what's realistic in terms of risk. And enough
on that.
Mr. Secretary, Yucca Mountain continues to be a terrific
goal and nuclear is looking at it saying we must have something
like that, so we have to keep moving ahead. We don't have
enough time here, and I don't want to give a lecture. I think
it would be good if you could review just the real status of
Yucca Mountain. You know, it is not just a problem of funding,
it's not a problem of again setting a new licensing date. It's
an analysis of just how can we get where we have to go.
I mean, these guidelines, the court decision, who's going
to make the new guidelines, I think you have to know
realistically what this is all about. I would hope that in a
sense of helping us, if you could do such a summary and make it
available as kind of an adjunct to this hearing, do you think
you might be able to do that with your people? I think it would
be a good exercise anyway, because it's sort of amorphous from
the standpoint of what we see happening. I guess you understand
what I'm talking about.
Secretary Bodman. I do understand, sir, and you certainly
have my commitment that I will be--this is again--this is a
major responsibility of this job, and I will certainly look
into it and I will certainly try to determine what a practical
and reasonable and responsible way of proceeding is. And I will
be happy to discuss that with you.
[The information follows:]
There are several issues facing the Yucca Mountain Program which
the Department is working to overcome to move the program forward.
The U.S. Court of Appeals for the District of Columbia Circuit
vacated the Environmental Protection Agency's (EPA's) Yucca Mountain
radiation protection standard with regard to its 10,000 year regulatory
compliance period. Consistent with the President's direction, EPA is
currently working to revise its Yucca Mountain radiation standard to
conform to the court's direction. The Department remains hopeful that
EPA's work in promulgating the standard will be contemporaneous with
our work on the license application and that both will be completed by
the latter part of the year.
Both Congress and the Administration have recognized the long-term
funding problem facing the Program and the need to make Nuclear Waste
Fund monies available for their intended purpose. Historical funding
patterns will not be adequate to support the increased construction and
acquisition activities required to begin acceptance of spent nuclear
fuel and high-level waste. The Administration believes that the fees
currently paid to the Government by utilities to finance the repository
should be treated as offsetting collections against the appropriation
from the Nuclear Waste Fund. To ensure stable and sufficient funding,
the Administration continues to support the concept embodied in the
legislative proposal submitted last year to provide the increased
annual funding needed for construction and operation of the repository.
The Administration remains interested in pursuing such a proposal and
intends to have further discussions with Congress in the hope of
reaching some agreement.
Despite these issues, the Department is continuing its efforts to
move the program forward. The Department has developed a draft license
application. We are working diligently to refine the analysis and
improve the presentation of the technical information to meet our
objective of completing preparation of a high quality license
application that addresses existing regulatory requirements and having
it ready to submit to the Nuclear Regulatory Commission by December
2005.
The Chairman. You know, you might be the kind of Secretary
that may end up saying, while we're looking at this, we've got
to something else, because this might be something that takes
so long while we move ahead with it. I don't know. I'm thinking
we have a responsibility to do that too. But ultimately we have
to do it in conjunction with you all.
Secretary Bodman. I'll be happy to work with you, sir.
The Chairman. Now, plutonium disposition, we're all talking
about trying to maximize the effort that had been going along
fairly well by the United States and other countries, with
reference to the kind of dangerous materials like plutonium and
trying to gather up all those materials.
I need assurance from you, which I'm sure you will give us,
that you will push as Secretary of Energy for a conclusion to
this agreement with the Russians to get this huge plutonium
agreement implemented. I'm concerned about sooner or later
losing this huge nest egg of money, $200 million sitting out
there to get this job done. I say it because I know you know,
but I just want you to tell the committee that you will pursue
it.
The State Department is cooperative. They aren't always as
interested in pursuing things. I shouldn't say that. They also
find more reasons to not reach conclusions than you all. You've
lost, or will lose soon, the best person you have over there in
this area. I'm very sorry about that. If you know what I'm
talking about, you might take a look. That's a very, very bad
loss.
Now, as part of all this, we have a MOX fuel project.
You're aware of that?
Secretary Bodman. Yes, sir.
The Chairman. That's historic for America. Could you kind
of give us a timetable for the record on MOX, the plant that
we're building?
Secretary Bodman. Well, the issue, as you're aware, sir,
has been related to our getting an agreement with our Russian
counterparts as to the definition of liability in the
construction that is anticipated to occur in Russia as a part
of this process. And we have recently made a proposal to the
Russians that seems to have at least gone part way to relieving
that delay.
We find ourselves, as with a lot of these projects that I'm
responsible for, with an intersection between the legal
requirements on the one hand and the engineering requirements
on the other hand. And therefore, we can't proceed until we
have the legal agreement that will enable us to go forward in
an acceptable way.
So you certainly have my commitment, sir, that I will be
working diligently with our colleagues in the State Department
to--I already have spent a day with my counterpart on the
Russian side, and we're going to continue to try to work on
this issue and see if we can't get this pushed through.
It is hard. I mean, the Russians have their own----
The Chairman. No question.
Secretary Bodman [continuing]. Pace, and own way of doing
things, and so I don't want to make any promises. The only
thing I can promise is that I'll work very hard on it.
The Chairman. Well, Mr. Secretary, my experience has been
that one of the ways in the past that you can make progress
with the Russians is to get to know the people that you're
working with. I mean, they have a--for some reason, maybe it's
justified in their history or culture, it's very much easier to
deal a short distance than long distance, and that's why some
of our people had success.
Sig Hecker, who I introduced to you in Los Alamos----
Secretary Bodman. Yes.
The Chairman. He's kind of the breakthrough man, because he
spent enough time to get to know all these people. They all
know him--you know, he can call them on the phone and they know
who it is and they're willing to talk.
We put in some new people, and you know, it takes time. We
don't know how long it takes the Russians to arrive at a
conclusion that they're talking to the right person and where
it belongs in their bureaucracy. So you will find that out, but
I think your willingness to meet this early is terrific news.
Secretary Bodman. I appreciate your advice, sir.
The Chairman. A little trivial item, but it kind of
disturbs me. We have an Office of Nuclear Energy Research
Programs. Now, I don't understand why the President's budget
requests $1 million for the National Academy of Science to
undertake an evaluation of that office. You might not even know
about that.
Secretary Bodman. Well, I do know that there is a request
or an intention at least of pursuing the evaluation of the Gen
IV technology, and it may be that's what the NAS requirement
is. I don't know.
The Chairman. Well----
Secretary Bodman. I will be happy to get you something
more.
[The information follows:]
The FY 2006 Budget requests funding for the National Academy of
Sciences, to undertake a comprehensive, independent evaluation of the
nuclear energy program's goals and plans, and to validate the process
for establishing program priorities and oversight (including the method
for determining the relative distribution of budgetary resources). The
evaluation will result in a comprehensive and detailed set of policy
and research recommendations and associated priorities (including
performance targets and metrics) for an integrated agenda of research
activities that can best advance NE's fundamental mission of securing
nuclear energy as a viable, long-term commercial energy option to
provide diversity in energy supply. An interim evaluation will be
completed in time to inform NE's 2008 budget planning, with a final
report completed before May 2006.
The Chairman. We're going to have to appropriate this
thing--it happens to be I'm the chairman of the appropriating
subcommittee, and I won't put this in if you all don't convince
me that it's for that. I'm not going to have them look at the
whole office of Nuclear Energy Research unless you tell me
there's something to be looking at. I don't want it delayed by
something like this.
Secretary Bodman. All right, sir.
The Chairman. So, if you'll have your staff let us know.
Secretary Bodman. I'll be happy to do that.
The Chairman. My last one, but before I submit it, I want
to say everything isn't bad in this budget. You know, we
haven't talked about the nuclear energy research and
development programs, there's a significant increase, the
initiatives on research for nuclear--while some small ones have
been zeroed out, clearly the advanced fuel cycle initiative is
in good shape, the NP 2010, 83 percent increase. That's pretty
good. I don't know how much faster we can go.
For a change, Yucca Mountain was funded right, although not
at enough money. At least we don't have to spend all our other
program money for Yucca, which we can't do. So we're grateful
that that's in the budget.
The hydrogen fuel initiative is pretty good. You could have
cut that $80 or $90 million and paid for some of these other
things, but I think the priority is right.
Fossil fuel energy, not bad, an 18 percent increase.
Incidentally, those all come to the Appropriations Committee
now in one place instead of it going to two subcommittees. All
of those will come to the----
Secretary Bodman. That's great.
The Chairman. I think it's good for the country. For me
it's good to know that we don't go one way here and another way
there.
Now, my last issue has to do with----
Secretary Bodman. If I could just say so, I'm happy that
you find certain aspects of the budget positive. That's good.
The Chairman. Thank you. They put pretty much all of Energy
in one place, not quite, but that's good enough.
One last issue that is not necessarily parochial, but would
seem small, because it has to do with small business and small
business set-asides, shouldn't be burdening a Secretary with
it. But it's the kind of issue that will burden you if those in
charge don't take care of doing it right.
So there are two or three issues that are tough. One, the
DOE is going to be rated as an inferior participant in giving
out small business contracts, which means they're going to be
deficient in small business contracts to the minority, because
they're going to rub shoulders.
Now, part of that is because the DOE has very large M&O
contractors, and they're judging the performance excluding the
M&O contractors. Now, I can't fix that yet. I'll fix it in
appropriations if we can't find a way, and I urge that you try
to find a way. I don't know how, but get the government
together and say, we can't do this.
Second, it seems that in response to some problems in the
small business set-aside evaluation, that the NNSA is proposing
to bundle contracts. Now, I thought our President told us for
the purpose of small business, in particular minority small
businesses, that we wouldn't bundle, even though it was
slightly more efficient, to the detriment of small business.
Your NNSA people in Albuquerque and Los Alamos are moving
in that direction. I don't like to go over there and tell them
what I think. I'm telling you what I think. I hope you'll tell
the Ambassador, who in turn will tell those people, that we
need some real justification for this bundling, which makes
less small business opportunities.
So the whole package I'm talking about is small business,
and you have somebody in charge. I hope you will just tell him
that the Senator doesn't want to cart them up here, but I will.
We'll have a hearing with them if they want to, because we've
got to fix these, and we're willing to work on it. Senator
Bingaman's willing to work on it. So I leave you with that.
Secretary Bodman. I think they'd rather have me here, sir,
than to have them there, so we'll go to work on it.
The Chairman. I hope so. So we're going to close the
hearing. I ask consent that Senator Salazar, who was indisposed
with other business, that he be permitted to place his
statement in the record as well as others, and that Senators be
allowed to submit questions. We hope that you will answer them
within a reasonable time, you and your staff. I appreciate your
willingness to work with us. We're in recess.
Secretary Bodman. I look forward to it, sir.
[Whereupon, at 12:04 p.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of Secretary Bodman to Questions From Senator Domenici
LOS ALAMOS RFP
Question 1. Secretary Bodman, as I noted in my opening remarks, I
am deeply concerned with the Los Alamos Draft Request for Proposal. The
Department must assure that the bidding process is fair and does not
have the unintended consequence of causing a mass exodus of our best
scientists from the lab.
Mr. Secretary, will you actively involve yourself in the RFP
process as soon as possible and work to make job retention and
scientific research a top priority?
Answer. Yes, I have been actively involved in the Los Alamos
National Laboratory (LANL) procurement since my confirmation as
Secretary of Energy. I have met with Ambassador Brooks and the Chairman
of the Source Evaluation Board to review this critical procurement to
understand the employee issues, industry perceived barriers to
competition, and what the SEB is doing to address these matters. I have
made recruitment and retention of critically skilled employees my top
priority and will continue to stay involved with the process to make
sure that we strengthen LANL and its scientific capabilities to enhance
science in the national interest while ensuring a fair and open
competition.
SMALL BUSINESS BUNDLING
Question 2. Mr. Secretary, I understand that DOE is last among
federal agencies in terms of compliance with the small business
contracting goals set by the Administration. I also recognize this is a
result of policy that prohibits the Department from counting small
business sub contracts let by the M&O contractors.
To address this shortfall, NNSA has proposed an initiative to take
$100 million in procurement from each of the three NNSA labs and bundle
them to be offered by either the Albuquerque Service Center or
Headquarters.
Both Sandia and Los Alamos place at least 45% of their subcontracts
with small business--well over the SBA required level of 23%.
If, however, NNSA insists on consolidating a large number of
contracts I am concerned that this will have a serious impact on small
business in New Mexico the economy and State tax receipts.
It is likely to impact the labs through a reduction in LDRD funding
and may reduce NNSA mandated small business goals negotiated by each
lab.
This program is ill conceived and poorly executed as the
procurement targets have varied widely as have the goals and terms
proposed by NNSA.
I am aware that the Department has negotiated a one-year grace
period in which to achieve this goal.
In light of this grace period, can you please explain why you have
insisted that the NNSA proceed with this proposal despite strong
objection by the labs?
Answer. While the NNSA has not instituted a grace period for
implementing the Tri-Lab initiative, it has planned a phased
implementation. The NNSA agreed to wait until fiscal year 2006 for full
implementation of funding aspects of the initiative. During fiscal year
2005, the laboratories were allocated the funding associated with Tri-
Lab actions to be placed directly by the NNSA. Funding was transferred
to the Service Center as procurement actions were accomplished. By
doing so, LDRD funding, fee bases, and indirect cost pools were not
impacted. NNSA and its laboratories are exploring alternative funding
mechanisms for future years. Working closely with the laboratories, the
NNSA has identified potential contract opportunities that will result
in obligations between $10 to $20 million in additional federally
awarded small business contracts for the current fiscal year.
The expectation that DOE and NNSA can award 23% of the NNSA budget
to small businesses when more than 80% of the DOE/NNSA budget is
obligated to Management and Operating contracts presents a real
challenge. Nevertheless NNSA continues to strive for increases in the
amount of prime contracting dollars awarded to the Small Business
community, and we are working to support the 23% federal-wide goal. In
the absence of relief as to how NNSA account for its contribution to
Small Business contract awards, by recognizing that the subcontracts of
our M&O contractors are providing substantial mission opportunities for
Small Businesses, the NNSA has undertaken an innovative strategy to
increase small business acquisition opportunities that can be counted
as SBA and the Office of Federal Procurement Policy have mandated as
prime federal contract awards, and that is consistent with commercial
best practices of strategic sourcing and enterprise-wide buying. The
NNSA initiative to jointly work with its laboratory contractors to
identify requirements that can be awarded directly by the NNSA to small
businesses is an innovative strategy by which the NNSA will be able to
generate additional prime contract small business awards.
Question 3. Mr. Secretary, I understand that DOE is last among
federal agencies in terms of compliance with the small business
contracting goals set by the Administration. I also recognize this is a
result of policy that prohibits the Department from counting small
business sub contracts let by the M&O contractors.
To address this shortfall, NNSA has proposed an initiative to take
$100 million in procurement from each of the three NNSA labs and bundle
them to be offered by either the Albuquerque Service Center or
Headquarters.
Both Sandia and Los Alamos place at least 45% of their subcontracts
with small business--well over the SBA required level of 23%.
If, however, NNSA insists on consolidating a large number of
contracts I am concerned that this will have a serious impact on small
business in New Mexico the economy and State tax receipts.
It is likely to impact the labs through a reduction in LDRD funding
and may reduce NNSA mandated small business goals negotiated by each
lab.
This program is ill conceived and poorly executed as the
procurement targets have varied widely as have the goals and terms
proposed by NNSA.
I am aware that the Department has negotiated a one-year grace
period in which to achieve this goal.
The GAO is currently reviewing DOE subcontracting rules for a
report later this year. Would you agree to put off execution of the
Tri-lab bundling proposal until the GAO completes their work and
submits its recommendations?
Answer. Further implementation of the Tri-Lab initiative is planned
for the next fiscal year. As they become available, I will ensure that
findings and recommendations from the GAO will be thoughtfully
considered and integrated as appropriate into our small business
program planning. However, NNSA efforts to directly award certain
contracts to small business in FY2005 must continue as these actions
are close to completion and not proceeding could result in delays that
might have an adverse impact on laboratory programs.
As a matter of clarification, the Tri-Lab initiative involves
federal award of individual requirements to small businesses as well as
strategically consolidating requirements of a similar nature for award
to small businesses. The initiative does not constitute contract
bundling, as that term is defined in Part 2 of the Federal Acquisition
Regulation. ``Bundling'' or ``bundled requirement'' refers to the
consolidation of two or more procurement requirements for goods or
services into a solicitation of offers for a single contract that is
likely to be unsuitable for award to a small business concern. The
unsuitability may be due to the diversity, size, or specialized nature
of the elements of the performance specified, the aggregate dollar
value of the anticipated award, the geographical dispersion of the
contract performance sites, or any combination of these factors.
Question 4. Mr. Secretary, I understand that DOE is last among
federal agencies in terms of compliance with the small business
contracting goals set by the Administration. I also recognize this is a
result of policy that prohibits the Department from counting small
business sub contracts let by the M&O contractors.
To address this shortfall, NNSA has proposed an initiative to take
$100 million in procurement from each of the three NNSA labs and bundle
them to be offered by either the Albuquerque Service Center or
Headquarters.
Both Sandia and Los Alamos place at least 45% of their subcontracts
with small business--well over the SBA required level of 23%.
If, however, NNSA insists on consolidating a large number of
contracts I am concerned that this will have a serious impact on small
business in New Mexico the economy and State tax receipts.
It is likely to impact the labs through a reduction in LDRD funding
and may reduce NNSA mandated small business goals negotiated by each
lab.
This program is ill conceived and poorly executed as the
procurement targets have varied widely as have the goals and terms
proposed by NNSA.
I am aware that the Department has negotiated a one year grace
period in which to achieve this goal.
Can you please guarantee that this proposal will not impact current
small business contracts in New Mexico and not negatively impact the
LDRD program at each of the labs this year and following years?
Answer. The Tri-Lab initiative does not impact current small
business contracts in New Mexico. Current laboratory small business
contracts in New Mexico will continue through their contractually
scheduled completion dates. Once completed requirements would be
subject to competitive award. I expect the initiative to have a
positive impact on future small business opportunities as current
contracts with large business are awarded to small businesses.
In fiscal year 2005, the laboratories have been allowed to transfer
funding for individual contract actions, thereby avoiding impact on
LDRD funding. Minimizing or avoiding any impact on LDRD programs in
fiscal year 2006 and beyond is being addressed as part of planning for
further implementation of the Tri-Lab initiative in fiscal year 2006.
The NNSA is actively working with the laboratories to identify
alternative funding mechanisms. I am confident that accounting system
issues associated with LDRD accruals in future years will be adequately
addressed to avoid negatively impacting LDRD programs at each of the
labs.
Question 5. Mr. Secretary, I understand that DOE is last among
federal agencies in terms of compliance with the small business
contracting goals set by the Administration. I also recognize this is a
result of policy that prohibits the Department from counting small
business sub contracts let by the M&O contractors.
To address this shortfall, NNSA has proposed an initiative to take
$100 million in procurement from each of the three NNSA labs and bundle
them to be offered by either the Albuquerque Service Center or
Headquarters.
Both Sandia and Los Alamos place at least 45% of their subcontracts
with small business--well over the SBA required level of 23%.
If, however, NNSA insists on consolidating a large number of
contracts I am concerned that this will have a serious impact on small
business in New Mexico the economy and State tax receipts.
It is likely to impact the labs through a reduction in LDRD funding
and may reduce NNSA mandated small business goals negotiated by each
lab.
This program is ill conceived and poorly executed as the
procurement targets have varied widely as have the goals and terms
proposed by NNSA.
I am aware that the Department has negotiated a one-year grace
period in which to achieve this goal.
Do you believe that M&O subcontracts to small businesses should be
included in the Department of Energy's overall small business
procurement calculation?
Answer. Yes, including M&O subcontracts in the overall small
business procurement calculation would provide a more accurate
portrayal of the total level of small business contracting accomplished
within the NNSA budget expenditures.
I do not think the current small business procurement calculation
is the right way to calculate accomplishments. Because of the manner in
which NNSA achieve their program mission accomplishment, the vast
majority of the NNSA budget is spent on, and through, the
Administration's unique management and operating contract arrangements.
Small Business goals are predicated on proposing a ``goaling'' that is
based on realistic opportunities for Small Business concerns. The
operation of our National Laboratories and Nuclear Weapons Plants, for
example, are not considered realistic opportunities for concerns that
are classified as ``small businesses.''
PLUTONIUM DISPOSITION
Question 6. Mr. Secretary, I am pleased that the Administration has
been able to resolve the internal debate over liability associated with
the Plutonium Disposition program and has made an offer to the
Russians. As I understand it, the U.S. and Russian delegates are
continuing their negotiations in good faith. I remain cautiously
optimistic that this matter will be resolved in the near term.
Unfortunately, this inaction has led to [a] year long delay to the
program. I have received a letter from you, Mr. Secretary, explaining
that the project will not meet the MOX production goal of January 2009.
The letter explained that the NNSA must restructure the project
schedule and funding requirements.
Can you please provide the Committee with an update as to the
status of the liability negotiations and the new timetable for the MOX
fuel project?
Answer. Although the start of construction of the U.S. and Russian
mixed oxide (MOX) facilities has been delayed due to the liability
issue with Russia, I am optimistic that the issue will soon be resolved
and that site preparation will begin in FY 2005 and full construction
will begin in FY 2006.
In late January, we submitted a potential path forward to the
Russians. We have had high-level meetings in Moscow on February 17 and
18 and March 21 and 22, 2005, and we are hopeful that this issue will
be resolved before President Bush and President Putin meet again in
early May.
Question 7. Mr. Secretary, I am pleased that the Administration has
been able to resolve the internal debate over liability associated with
the Plutonium Disposition program and has made an offer to the
Russians. As I understand it, the U.S. and Russian delegates are
continuing their negotiations in good faith. I remain cautiously
optimistic that this matter will be resolved in the near term.
Unfortunately, this inaction has led to [a] year long delay to the
program. I have received a letter from you, Mr. Secretary, explaining
that the project will not meet the MOX production goal of January 2009.
The letter explained that the NNSA must restructure the project
schedule and funding requirements.
Will the delays affect the FY 2006 budget request?
Answer. Construction of the U.S. and Russian MOX facilities has
been held up over a disagreement over liability for U.S. work performed
in Russia. We are currently negotiating this issue with Russia and hope
to have a resolution within the next few months.
As a result, DOE is currently planning to begin full construction
of both the U.S. and Russian MOX facilities in FY 2006 and has asked
for $339M for the U.S. MOX facility construction in the FY 2006 budget
request.
These funds will be essential to place large construction contracts
and begin equipment procurements to support the start of construction
at the Savannah River Site. Any significant cut in this request will
prevent the program from putting in place these critical contracts and
will delay the start of operations of the MOX facility.
NUCLEAR POWER 2010
Question 8. The Nuclear Power 2010 program was conceived to be a
cost sharing arrangement between the department and utilities to test
the still untested licensing process for new plants in our country. I
have real concerns regarding what I see as a pattern of ``foot-
dragging'' in the leadership of the NP 2010 program. Last year in
November, awards we made to two energy utility consortia's--those
monies have not yet been disbursed. I understand some changes have been
made in the membership of the consortia and this needs to be reflected
in the final agreements with the department. However, we are into our
fifth month since the awards were announced by the department. Will you
give me your assurance that you will use your vast knowledge of best
corporate practices and move the cooperative agreement process between
the department and utility consortia to conclusion in the very near
future? We have real momentum for the first time in three decades on
the course of new plants, I would dismayed to think our own Department
of Energy is the major impediment at the beginning of this historic
process.
Answer. The Department is moving with diligence to issue the
Nuclear Power 2010 cooperative agreements and associated FY 2005
funding to the industry. It is our firm desire to keep the momentum on
new nuclear plants progressing toward deployment.
The Dominion Energy decision to change its selected reactor
technology to the General Electric ESBWR design caused the Department
and industry to re-evaluate project cost, cost share, and annual
funding in both the Dominion Energy and NuStart projects. This is due
in part to the fact that the GE ESBWR reactor design is part of both
projects. In addition, NuStart requested additional FY 2005 funds to
accelerate the Westinghouse AP-1000 work scope. Both of these
conditions required re-submittal of detailed cost information by both
reactor vendors to the Department. In addition, intellectual property
rights terms and conditions required complex and lengthy negotiation
with the reactor vendors. The Department reached agreement on the terms
and conditions for the cooperative agreements during the week ending
March 11, 2005. Dominion signed and accepted the cooperative agreement
on April 4, 2005 while NuStart is expected to sign in late April 2005.
Question 9. What do you see as the three main issues facing U.S.
generating companies who might wish to build new nuclear plants?
Answer. The most important issues facing power companies in the
U.S. that are considering building new nuclear power plants include:
Licensing and Commissioning Uncertainty--The Nuclear
Regulatory Commission (NRC) licensing process, 10CFR Part 52,
for siting, building and operating new nuclear power plants has
never been previously used or demonstrated. This licensing
process needs to be exercised to assure power companies the
regulatory process is effective and efficient. In addition,
there remains uncertainty whether this new NRC ``one-step''
licensing process could be contested in court through
intervention after the plant has been completed and prior to
beginning operation, potentially leading to long and costly
delays.
Financial Uncertainty--The cost and duration to build a new
nuclear power plant in the United States is unclear. Some power
companies are interested in Generation III+ advanced light
water reactor designs that have the potential to offer
improvements in economics and safety over existing designs.
These reactor technologies have never been built before and
engineering remains to be completed. In addition, there is some
uncertainty regarding how long these designs will take to
construct. Reactor vendors estimates have been evaluated by
construction companies but as of yet have not been built in the
United States.
Uncertainty on Disposition of Spent Nuclear Fuel--Power
companies do not expect the spent nuclear fuel disposition
issue to be resolved prior to building new nuclear power
plants, however a clear disposition path and progress on that
path needs to be clearly evident before power companies would
likely make a build decision.
Accident Indemnification--Renewal of Price-Anderson accident
indemnification law is required by power companies before new
nuclear plants would be built in the U.S.
Question 10. The President said last Wednesday, February 23, in
Germany that he believed building more nuclear power plants in the U.S.
would help the country cut its dependence on foreign sources of energy.
Do you believe DOE is providing enough support to achieve this
objective?
Answer. The Department is providing the support necessary to deploy
new nuclear power plants in the United States. For instance, through
the Department's Nuclear Power 2010 program, we will continue to
partner with private industry, with the goal of demonstrating the
untested NRC regulatory processes for siting, constructing and
operating new nuclear power plants. Three Early Site Permit
demonstration projects are underway with site approval applications
under consideration by the NRC. Approval of these three sites is
expected in 2006. The Department is also supporting demonstration of
the combined Construction and Operating License (COL) process under
cooperative projects with Dominion Energy and NuStart Energy consortia.
These COL demonstration projects will develop applications for and
obtain NRC approval for at least two COLs. In addition, two advanced
standardized reactor designs, the Westinghouse AP1000 and the General
Electric ESBWR will be certified and the first of a kind engineering
completed as part of these projects.
In addition, looking further into the future, the Department's
Generation IV Nuclear Energy Systems program is making progress in
developing advanced nuclear energy technologies aimed at producing
emissions-free, cost-competitive electric power and hydrogen.
With these and other important activities, we believe the
Department is paving the way for a vibrant and substantial nuclear
energy future.
HYDROGEN
Question 11. What are DOE's plans and schedule for developing
nuclear plant production of Hydrogen as a transportation fuel?
Answer. As part of the President's Hydrogen Fuel Initiative, the
Department's Nuclear Hydrogen Initiative will conduct research and
development on enabling technologies and demonstrate hydrogen
production processes that are compatible with nuclear energy systems.
This research plans to progress through successively larger-scale
experiments until 2017, when the program expects to operate a nuclear
hydrogen production plant capable of producing hydrogen at a cost
competitive with other transportation fuels. This research is closely
coordinated with the research and development activities of the other
DOE Hydrogen Program offices--Energy Efficiency and Renewable Energy,
Fossil Energy, and Science--and with the Generation IV Nuclear Energy
Systems Initiative.
Major accomplishments expected in FY 2006 for the Nuclear Hydrogen
Initiative include:
Complete thermal optimization and characterization of the
sulfur-iodine thermochemical cycle and high-temperature
electrolysis laboratory-scale experiments.
Complete flowsheets, economic analyses, and system designs
for laboratory-scale experiments of high-potential alternative
thermochemical cycles.
Complete initial assessment of codes and standards
applicable to a hydrogen production facility coupled to a
nuclear reactor.
Question 12. What is the impact on natural gas prices and the
environment of moving to a hydrogen economy?
Answer. There are many different future scenarios for a hydrogen
economy with many different potential impacts on natural gas prices and
the environment.
On the environment: A hydrogen economy will improve criteria
emissions since hydrogen use is so clean (especially when used in a
fuel cell). The impact on CO2 emissions depends on how the
hydrogen is produced. The Department of Energy is emphasizing
technologies that will produce hydrogen from domestic resources with
low CO2 emissions. These include use of coal with carbon
capture and storage, renewable energy, and nuclear technologies. Use of
natural gas without carbon capture and storage (likely in the early
phase of a hydrogen transition) would have a more-or-less neutral
effect on CO2 emissions.
On natural gas prices: This is also highly dependent on future
hydrogen scenarios. Also, there is a natural feedback between natural
gas prices and technology choice. For example, if there is competition
between using coal with carbon capture and storage or natural gas with
carbon capture and storage, higher gas prices would tend to favor the
use of coal. In the early stages of transition to a hydrogen economy,
there would be a switch from petroleum use to natural gas use and this
would tend to have a downward influence on crude oil and petroleum
product prices and an upward influence on natural gas prices. However,
as advanced technologies for producing hydrogen are introduced, there
could be a significant downward influence on natural gas prices. For
example, the development of coal technologies to produce both hydrogen
and electricity could bring about less use of natural gas (and lower
natural gas prices) as this technology would become more competitive in
the electric power sector.
In summary, any specific answer to this question would depend on
the path of future hydrogen development that can not be predicted with
any reliability. What can be said is that the Department of Energy is
emphasizing technology development that will result in the production
of hydrogen from low-emission and domestic energy resources especially
emphasizing renewable energy, clean-coal technologies, and nuclear
technologies. A hydrogen economy based on these technologies would
significantly reduce criteria emissions and CO2 emissions
and would tend to reduce gas use (and therefore gas prices) in the
electric power sector.
NUCLEAR ENERGY
Question 13. In the President's Budget Request, there is $1 million
for the National Academy of Sciences to undertake an evaluation of the
Office of Nuclear Energy's research programs.
What can you tell me about this request, in detail?
Answer. The FY 2006 Budget requests funding for the National
Academy of Sciences, to undertake a comprehensive, independent
evaluation of the nuclear energy program's goals and plans, and to
validate the process for establishing program priorities and oversight
(including the method for determining the relative distribution of
budgetary resources). The evaluation will result in a comprehensive and
detailed set of policy and research recommendations and associated
priorities (including performance targets and metrics) for an
integrated agenda of research activities that can best advance NE's
fundamental mission of securing nuclear energy as a viable, long-term
commercial energy option to provide diversity in energy supply. An
interim evaluation will be completed in time to inform NE's 2008 budget
planning, with a final report completed before May 2006.
The budget request for Environmental Management is cut by half a
billion dollars. The budget justification for this reduction cites that
the clean-up work at Rocky Flats and Fernald is set to be completed
soon.
Question 14. Are these two sites going to be cleaned up this year?
Are they on schedule? Would you say these are success stories for the
program?
Answer. Funding in the FY 2006 budget request will allow Rocky
Flats and Fernald to remain on track toward project completion and site
closure in 2006. Rocky Flats and Fernald are just two examples of
success stories resulting from EM's accelerated risk reduction and site
closure initiative.
With respect to the Rocky Flats success story, EM is on schedule to
complete the safe cleanup and closure of an entire former nuclear
weapons production site. Early forecasts estimated that it would take
more than 60 years and $37 billion to complete a site closure. In
implementing a reformed EM cleanup program, the Rocky Flats site is now
on track to be finished in 2006, at a total cost of approximately $7
billion. When the cleanup is completed, in which more than two million
55-gallon drums equivalent of radioactive waste materials will have
been removed, the site will be transitioned to a National Wildlife
Refuge under the auspices of the U.S. Fish and Wildlife Service,
turning the 16,000+ acre reserve from a perceived public liability to a
public asset.
Fernald is also an example of EM's success in safely accelerating
risk reduction and site closure. In FY 2000, Fernald's site closure
date was projected to be 2009. As the project progressed through the
early phases of decontamination and demolition of the former uranium
processing operations, EM and its contractor reassessed the cleanup
goals of the site. As a result of reforms implemented at the Fernald
site, in June 2003, the project was restructured to be completed by
2006. The Fernald Closure Project is on track toward project completion
and site closure in 2006, if we are able to disposition the wastes in
Silos 1 and 2. We continue to work on a path forward for these wastes.
When completed, much of the 1,050-acre Fernald will be transitioned to
a public nature preserve.
This budget number reflects the Administrations goal of having 31
sites remediated by 2025. After 2025, 6 sites will require further
remediation work.
Question 15. What are those six sites? What are their projected
cleanup dates?
Answer. As of the end of FY 2004, the Department had completed
cleanup of 76 of 114 contaminated sites. By the end of 2025, the
Department's goal is to complete cleanup of an additional 32 sites,
bring the total number of DOE sites completed to 108 out of 114.
After 2025, five sites will remain to be completed. The five sites
and their planned completion dates are listed below.
------------------------------------------------------------------------
Projected
Site year of
completion
------------------------------------------------------------------------
Nevada Test Site............................................ 2027
Tonopah Test Range Area..................................... 2027
Idaho National Laboratory................................... 2035
Waste Isolation Pilot Plant................................. 2035
Hanford (Richland and Office of River Protection)........... 2035
------------------------------------------------------------------------
In addition, we have not finalized the scope of the Paducah (sixth
site) to 1confirm whether or not this will extend beyond 2025.
YUCCA MOUNTAIN
Question 16. You have testified that DOE's submission of the
construction license application to the Nuclear Regulatory Commission
which had been planned for December 2004 is now anticipated to take
place by the end of calendar year 2005.
Are you confident that the Department will submit the license
application in 2005?
Answer. We remain hopeful that EPA's work in promulgating the
standard will be contemporaneous with our work on the license
application and that both will be ready by the latter part of the year.
We have a draft of the license application. We are making improvements
to the analysis and presentation of information to meet our objective
of completing preparation of a high quality license application by the
end of this calendar year.
Question 17. What factors could jeopardize this schedule?
Answer. As you are aware, the schedule is dependent on external
factors outside the Department's control, which can impact the
program's ability to move forward. Two examples of these external
factors are the finalization of the Environmental Protection Agency's
radiation protection standard and securing adequate resources to
support programmatic requirements.
Question 18. In particular, when would a draft revised radiation
standard have to be issued by EPA for DOE to meet this schedule?
Answer. We remain hopeful that EPA's work in promulgating the
standard will be contemporaneous with our work on the license
application and that both will be ready by the latter part of the year.
The timing of the issuance of a draft standard would need to be
consistent with the finalization of the standard this year.
Question 19. Could legal or regulatory challenges to a revised EPA
standard impact the timing of license application?
Answer. It is not expected that legal or regulatory challenges to a
revised EPA standard will impact the Department's ability to submit the
license application to the Nuclear Regulatory Commission.
Question 20. The FY 2006 budget request is significantly lower than
forecast in last year's submission. To date, the Administration has not
provided out-year projections for funding requirements for the project
from 2007 and beyond. Does the Administration anticipate that funding
requirements will increase dramatically for the program in FY 2007
following submission of the license application?
Answer. The Administration anticipates that funding requirements
will increase dramatically for the program in FY 2007 following a
submission of the license application. The Department recently provided
two illustrative ten-year funding profiles to various Congressional
Committees that estimated the total amount of funds that are needed for
the program from Fiscal Year 2006 through the opening of the
repository. Both estimates were approximately $12.5 billion. Those are
preliminary profiles subject to revision, and do not necessarily
represent the policy of the Administration. It should be noted that if
adequate and timely funding is not provided the program's schedule and
costs will be significantly impacted.
Question 21. To what extent is the ability to increase program
funding within constrained overall budgets dependent on reclassifying
the way that the Nuclear Waste Fund is scored in the budget process?
Answer. The program needs stable and sufficient long-term funding
to implement our Nation's radioactive waste management policy. The
current procedure used to score Nuclear Waste Fund revenues does not
encourage the appropriation of the full amount of the fees received
annually because the receipts do not directly offset the appropriation
for the repository program. Reclassification of the annual receipts
into the Nuclear Waste Fund addresses this issue. The Administration
remains interested in pursuing an alternative funding mechanism for the
repository program. Schedules and cost estimates for the repository
program do assume stable and adequate funding. Without a change to the
funding mechanism program funding shortfalls are likely. Such
shortfalls, in turn, will cause significant delays in repository
construction and eventual operations threatening the very existence of
the repository.
Question 22. The FY 2006 request includes an increase of nearly $55
million for project Transportation activities including completion of
the rail alignment EIS, issuing a contract for Nevada rail, and
continued work on cask and railcar design and certification. For many
years, transportation activities have been deferred as budgets were
reduced from the Administration request.
How critical are these activities to maintaining program schedules
and what would be the impact if this funding was not provided in FY
2006?
Answer. Developing the capability to accept and transport spent
nuclear fuel and high-level waste to repository facilities is a
critical activity as the Department moves forward. Transportation
activities, such as developing the Environmental Impact Statement for
the rail line and engaging States in transportation planning
activities, have begun in earnest. A reduction in funding will likely
impact our ability to implement a key element of the waste management
system.
YUCCA MOUNTAIN
Question 23. It was reported in the Press on late Tuesday that a
senior official with the department said that the repository wouldn't
be open until the 2012-2017 time-frame. Director Chu who recently left
the program said that the repository would open in the 2012 time frame.
There are 66 law suits by utilities pending against the department; one
has been settled for $300 million until 2010. The department and the
federal treasury according to a February 14 article in the LA Times
said that by some estimates, the federal government could bear
penalties and costs of $60 billion if Yucca Mountain is never built.
What is the correct timeframe for the repository to open? Can you
provide to the committee an estimate or even your best guess on what
all the lawsuits may cost the federal government if the repository
doesn't open until 2017?
Answer. The 2010 deadline is no longer feasible. As we indicated in
last year's testimony, if the program did not receive its full request
of $880 million, it would be unable to meet the goal of beginning waste
acceptance in 2010. As you know, we did not receive the full funding
amount and so now we are re-evaluating the program's schedule. The
Department's efforts in this area are complicated by the Court's remand
of the 10,000-year time period in the Environmental Protection Agency's
radiation protection standard and by the ongoing need for stable
funding. We also need predictable and adequate program funding to allow
access to the funds provided by the utilities, and the ability to start
construction of various non-nuclear facilities prior to construction
authorization. When these issues are resolved, we will then be in a
position to establish a better estimate for opening the repository.
As we have not yet developed a firm schedule for the opening of
Yucca Mountain, the Department has not yet developed an updated
estimate of the potential liability to which the government may be
exposed as a result of the delay in spent fuel acceptance. Our prior
estimate of $2 to $3 billion was based upon beginning receipt at Yucca
Mountain in 2010. The utilities have estimated that they might incur
additional costs for each year of delay beyond 2010, and they will
likely seek compensation from the United States in litigation. The
courts have not yet determined federal government liability, but the
potential exposure could be in the billions.
CLEAN COAL TECHNOLOGY/FUTUREGEN
Question 24. Mr. Secretary, in reviewing the Fossil Energy aspects
of the DOE Budget, it is clear that the priority focus is on promoting
clean coal and carbon sequestration efforts.
Would you please tell us about the progress made so far under the
Clean Coal Power Initiative and FutureGen programs, and what the level
of industry participation has been like in FutureGen?
Answer. There is indeed priority being placed within the Coal
Program to develop clean coal technology options that would eliminate
the environmental concerns associated with the use of coal, our most
abundant, low cost energy resource. The Clean Coal Power Initiative
(CCPI) and the FutureGen initiative, together with the base coal R&D
program, have near-, mid-, and long-term goals to that end. Five out of
six CCPI Round 1 projects have commenced and one is still under
negotiation. Four CCPI Round 2 projects were recently selected and
awards are currently being negotiated.
The success we have had over the last 30 years in developing our
present clean coal technology base (through basic research, CCT and
CCPI programs), has now allowed us to reach for what was unimaginable
30 years ago-zero emission coal technology.
The 30 years of research, in partnership with industry and
academia, have allowed us to embark on the FutureGen initiative, which
aims to establish the technical and economic feasibility of essentially
zero emission plants. U.S. utilities and coal producers representing
over 20% of U.S. coal-based electricity generation and over 40% of U.S.
coal production have formed a consortium-the FutureGen Alliance-and
pledged $250 million in cash to pursue the project as a public/private
partnership. Negotiations between DOE and the Alliance are underway to
finalize the cooperative agreement to pursue the project. There has
also been an outpouring of support from State governments for
FutureGen.
Question 25. What reasons supported the decision to reduce funding
by 20% for the new Office of Electric Transmission and Distribution?
Have the goals of that office changed?
Answer. The FY 2005 comparable appropriation of $120.2 million
reflects the merger of the Office of Energy Security and Assurance into
the Office of Electric Transmission and Distribution (OETD), consistent
with the funding Congress provided in the Consolidated Appropriations
Act, 2005. Approximately $19.3 million of OETD's FY 2005 appropriation
is for activities of the former Office of Energy Security and
Assurance.
The FY 2006 budget request of $95.6 million is a 19 percent
reduction to the FY 2005 enacted level for these programs. However, the
FY 2005 enacted level includes $51 million in Congressionally-directed
activities. When the FY 2005 level is adjusted for this, the FY 2006
President's request reflects a slight increase.
OIL AND GAS R&D TERMINATION
Question 26. How will termination of the oil and gas technology
program affect progress made by private companies in these areas?
Answer. Much of the Department's oil and natural gas research and
development is jointly funded by industry and the government. It was
determined that the industry has the capacity to pursue this research,
especially in light of the current strong economic performance of the
industry.
FOSSIL ENERGY
Question 27. The U.S.-China Energy and Environmental Center was
zeroed out. What did that program do? Is there another program at DOE
or another agency that promotes cooperation between the U.S. and China
on energy and environmental challenges?
Answer. The U.S./China Energy and Environmental Technology Center
works to facilitate the export of American goods and services to
China's growing power industry, with its focus on increasing the market
share of U.S. clean coal technologies.
The 2006 Budget provides $1 million for International Program
Support, with activities including enhancing the expansion of cleaner
energy technology power systems in the Pacific Rim. The 2006 Budget
also provides $1 million for Coal Technology Export, which works to
facilitate the development and deployment of Zero Emissions
Technologies for fossil fuels internationally, with partnerships to
advance environmental protection by promoting deployment of cleaner
energy power systems.
CLEAN COAL TECHNOLOGY/FUTUREGEN
Question 28. Mr. Secretary, it is clear to me that the nation will
rely more on our vast coal resources not just for the generation of
electricity but potentially for natural gas substitutes and even diesel
fuel.
Would you please explain to the Committee how the Clean Coal
Technology program and the FutureGen program will help us meet our
energy needs in the short, mid- and long-term?
Answer. The Clean Coal Technology program is a government and
industry co-funded effort to provide technical and operational data of
innovative coal technologies demonstrated at commercial scale.
Beginning in 1985, the Department administered five competitive
solicitations selecting projects with the potential to satisfy the
requirements of the energy markets while improving the environmental
performance of coal based technologies. To date, more than thirty
projects have been successfully completed, providing the marketplace
with valuable performance experience and data for a variety of
applications.
The Fiscal Year 2006 budget supports the Department's continuing
effort to fulfill President Bush's 10-year, $2 billion commitment to
clean coal research, with funding for the President's Coal Research
Initiative (CRI) of $286 million, a $13 million increase over the 2005
enacted level. The 2006 Budget brings the total requested funding for
clean coal research to $1.6 billion over five years, on pace to exceed
the President's ten-year pledge by more than 50 percent.
The coal research program provides a balanced portfolio that
focuses on near-, mid- and long-term goals. In the short term, the
Clean Coal Technology program is developing affordable environmental
technologies, such as mercury controls, for both existing and new coal-
fired power plants. For the mid-term, the program is advancing much
cleaner, more efficient options for new power plants, such as
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency
power plants--with low-cost carbon sequestration--as embodied in the
research goals of the President's FutureGen Initiative.
The FutureGen program aims to establish the capability and
feasibility of co-producing electricity and hydrogen from coal with
essentially zero emissions, including carbon sequestration and
gasification combined cycle, both integral components of the coal-
fueled power plant of the future. The co-production of hydrogen will
also support the President's call to create a hydrogen economy and fuel
pollution free vehicles.
The clean coal technologies and FutureGen support America's long-
term energy security and meet our future energy needs by advancing
technologies that can use coal, our most abundant low-cost domestic
energy resource, cleanly, efficiently and affordably.
Question 29. Mr. Secretary I am also very concerned about our
existing generating plants. At the moment the U.S. gets just over half
of its electricity from coal fired power stations. Many of those plants
are nearly three decades old.
What role do you envision the Department playing in efforts to
replace or re-power our existing fleet of coal-fired power plants?
Answer. The principal Departmental goal guiding research into coal
power is the following: Create public/private partnerships to provide
technology to ensure continued electricity generation and hydrogen
production from the extensive U.S. fossil fuel resource, including
control technologies to permit reasonable-cost compliance with emerging
regulations, and ultimately, by 2015, zero emission plants (including
carbon) that are fuel-flexible, and capable of multi-product output and
energy efficiencies over 60 percent with coal and 75 percent with
natural gas.
The technology options include:
Emission control technology that can be retrofitted to
existing plants or can be used on replacement plants.
New, clean and efficient electricity generation technology,
such as integrated gasification combined cycle (IGCC) that can
be used to repower or replace existing power plants.
And, in the long-term, development of essentially zero
emission technology (such as FutureGen) that could replace
existing plants as well as be used for new capacity additions.
As part of this development effort and to accelerate the commercial
introduction of these technologies, the Department has competitively
and on a cost-shared basis, partnered with industry to demonstrate
these technologies on a commercial scale under the Clean Coal Power
Initiative.
Recently, under this initiative, two IGCC and two mercury and other
pollutant control technologies were selected for demonstration.
Question 30. I realize that it is difficult to see very far into
the future of the federal budget. But my colleagues and I are very
concerned that new coal related technology is developed and deployed as
rapidly as possible.
Can you assure us that the Department is committed to full and long
term support for the development and deployment of new clean coal
technologies?
Answer. I can assure you that the Department is committed to full
and long term support for the development and deployment of new clean
coal technologies. We consider clean coal as a vital and strategic,
low-cost domestic resource needed to ensure the Nation's future energy
security. The Department would also like to see advanced coal related
technologies developed and deployed as rapidly as possible so that we
can realize the public benefits from their investment. The path to
success is to pursue a diverse coal research portfolio of technologies.
In that regard, our coal research program focuses on advanced clean
coal technology development that progresses from fundamental to applied
research and eventually to the point of demonstration.
The coal research program provides a balanced portfolio that
focuses on near-, mid- and long-term goals. For the short term, the
coal research program is developing affordable environmental
technologies, such as mercury controls, for existing coal-fired power
plants. For the mid-term, the program focuses on advancing much
cleaner, more efficient options for new power plants, such as
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency
plants--with low-cost carbon sequestration--as embodied in the research
goals of the President's FutureGen Initiative.
Question 31. I realize that it is difficult to see very far into
the future of the federal budget. But my colleagues and I are very
concerned that new coal related technology is developed and deployed as
rapidly as possible.
Can tell us briefly how the Department views the path to success in
this regard?
Answer. The Department would also like to see advanced coal related
technologies developed and deployed as rapidly as possible so that we
can realize the public benefits from their investment. The path to
success is to pursue a diverse coal research portfolio of technologies.
In that regard, our coal research program focuses on advanced clean
coal technology development that progresses from fundamental to applied
research and eventually to the point of demonstration. These
demonstrations are conducted through the competitive Clean Coal Power
Initiative where our industry partners must cost share at least 50
percent of the funding. This partnership investment is one of the key
indicators of industry's commitment to deploying the technology. In
addition, partners selected under the CCPI program must submit a
commercialization plan to get the technology into the market place.
Finally, there is a repayment provision on the government's investment
through the commercial sale of the technology.
The coal research program provides a balanced portfolio that
focuses on near-, mid- and long-term goals. For the short term, the
coal research program is developing affordable environmental
technologies, such as mercury controls, for existing coal-fired power
plants. For the mid-term, the program focuses on advancing much
cleaner, more efficient options for new power plants, such as
gasification-based and advanced combustion technologies. In the long-
term, the program is working towards zero emissions, high efficiency
plants--with low-cost carbon sequestration--as embodied in the research
goals of the President's FutureGen Initiative.
Question 32. The President has stated that his administration is
committed to reducing Carbon emissions significantly through voluntary
processes and through rapid development of new technologies to control
not only Carbon, but the criteria air pollutants--SOX,
NOX, and Mercury.
In addition to its research on Sequestration, what other
efforts does the Department have underway to promote cleaner
use of all forms of energy?
Answer. DOE supports these efforts that promote cleaner use of all
forms of energy, not just coal:
Clear Skies Initiative: In 2002, President Bush first
proposed ``Clear Skies'' legislation, a multi-pollutant
legislative proposal to reduce emissions of sulfur dioxide,
nitrogen oxides, and mercury from electricity generators, and
to improve air quality throughout the country. Using a proven,
market-based approach, Clear Skies would cut emissions of
pollutants from electric utilities by nearly 70 percent when
fully implemented. This historic proposal will bring cleaner
air to Americans faster, more reliably, and more cost-
effectively than under current law. Although Clear Skies is the
preferred approach, the administration is pursuing a regulatory
path to achieve many of the same health and clean air benefits.
This approach includes the Clean Air Interstate Rule, the Clean
Air Mercury Rule, EPA's Clean Diesel rules, and other clean air
programs.
Clean Air Interstate Rule: DOE collaborated with EPA in the
development of the final Clean Air Interstate Rule (CAIR), a
rule that will ensure that Americans continue to breathe
cleaner air by dramatically reducing air pollution in 28
eastern states. By 2015, CAIR will provide health and
environmental benefits valued at over 25 times the cost of
compliance. CAIR will permanently cap emissions of sulfur
dioxide (SO2) and nitrogen oxides (NOX)
in the eastern United States. When fully implemented, CAIR will
reduce SO2 emissions in 28 eastern states and the
District of Columbia by up to 70 percent and NOX
emissions by over 60 percent from 2003 levels.
Reduction in Diesel Emissions: In May 2004, the Bush
Administration finalized a rule that will dramatically reduce
pollution from heavy-duty diesel engines used in construction,
agricultural, and industrial equipment. Soot and NOX
emissions from diesels will decrease by more than 90 percent by
mid-2014, and the sulfur content of diesel fuel will be cut 99
percent by mid-2014. EPA has finalized new emission standards
for non-road diesel engines used in construction, agricultural,
and industrial operations. EPA also is proposing a more than 99
percent reduction in the sulfur content of fuel used by these
engines. The proposed emission standards would achieve a
reduction in particulate matter (PM) and nitrogen oxide
(NOX) levels of more than 90 percent. This will
significantly improve the air quality for Americans nationwide.
Mercury Emissions: On March 15, EPA issued the first-ever
federal rule to cap mercury emissions from coal-fired power
plants. This rule makes the United States the first country to
regulate mercury emissions from coal-fired power plants. When
fully implemented, these rules will reduce utility emissions of
mercury by nearly 70 percent.
Tax Incentives for Renewable Energy and Hybrid and Fuel-Cell
Vehicles: The President has called for tax incentives totaling
$3.6 billion through 2010 to spur the use of clean, renewable
energy, and energy-efficient technologies, such as hybrid and
fuel-cell vehicles, residential solar heating systems,
renewable energy produced from landfill gas, wind, or biomass,
and efficient combined heat and power systems.
Climate Change: President Bush has committed America to
meeting the challenge of long-term global climate change by
reducing the ratio of greenhouse gas emissions to economic
output by 18 percent by 2012 compared to 2002. To support this
commitment, the Bush Administration is carrying out a
comprehensive, innovative program of domestic and international
initiatives to:
(1) Improve our understanding of the science of
climate change. The President's FY 2006 budget includes
$181 million for the Climate Change Research Initiative
(CCRI), a -$36 million decrease from 2005. The CCRI
focuses on reducing significant uncertainties in
climate science, improving global climate observing
systems, and developing resources to support
policymaking and resource management.
(2) Encourage near-term voluntary and cost-effective
emissions reductions. In February 2003, President Bush
announced that leading firms from 12 major industrial
sectors and the membership of the Business Roundtable
have committed to work with four Cabinet agencies (DOE,
EPA, DOT, and USDA) to reduce greenhouse gas emissions
in the next decade. Participating industries included
America's electric utilities; petroleum refiners and
natural gas producers; automobile, iron and steel,
chemical and magnesium manufacturers; forest and paper
producers; railroads; and the cement, mining, aluminum,
and semiconductor industries.
(3) Develop transformational energy technologies to
substantially reduce greenhouse gas emissions in the
longer term. The United States is sponsoring, with
international and private-sector partners, a $1
billion, 10-year demonstration project to create the
world's first coal-fueled, near-zero-emissions
electricity and hydrogen power plant (FutureGen). This
project is designed to dramatically reduce air
pollution and capture and store greenhouse gases.
Through the President's Hydrogen Fuel Initiative, the
first car driven by a child born today could be powered
by pollution-free fuel cells that emit no greenhouse
gases.
(4) Build international partnerships with developed
and developing nations alike in a global, long-term
effort to work on climate change issues.
Control technology research: The Office of Fossil Energy
conducts a broad research and development program to develop
cleaner, more efficient, and less expensive technologies to
produce electric power from coal. Under the Innovations for
Existing Plants program, the Department is developing advanced
pollution control technologies for mercury and NOX,
improvements in power plant byproduct (ash and scrubber sludge)
recycling, and technologies to reduce power plant water
consumption.
This office also conducts R&D on advanced power cycles such as
Integrated Gasification Combined Cycle (IGCC), which have the potential
to dramatically reduce air pollution and water consumption from coal-
fueled electricity generation plants, and which are considered more
amenable to carbon capture than conventional power systems.
DOE/Fossil Energy also manages the Clean Coal Power Initiative
(CCPI), a program to demonstrate, at commercial scale, advanced
environmental control technologies for power plants, and advanced low
emitting power plants.
CLEAN COAL EMISSIONS RESEARCH
Question 33. Can you explain for the Committee what the
Department's objectives are with respect to this research and what
steps you will take to move sequestration technologies toward
commercialization?
Answer. Our aim is to have technologies which are safe, effective
and economical by 2015. We believe that these technologies may be able
to prevent hundreds of millions of tons of carbon from entering the
atmosphere. Our cost goal is to achieve technologies which can be done
at $10 per ton of carbon. I should emphasize that, although we do not
have these technologies available today, the research in this area is
very promising. We need aggressive R&D to realize our goals. For
example, we intend to continue extensive sequestration field testing to
demonstrate the effectiveness of this technology.
Question 34. What are your expectations regarding the amount of
time that will be needed beyond the coming fiscal year?
Answer. As stated in our last answer, our aim is to have
technologies which are safe, effective and economical by 2015. We
believe that these technologies may be able to prevent hundred of
millions of tons of carbon from being released to the atmosphere. Our
cost goal is to achieve technologies which can be done at $10 per ton
of carbon. I should emphasize that, although we do not have these
technologies available today, the research in this area is very
promising. We need aggressive R&D to achieve our goals.
Mr. Secretary, a number of organization involved in energy
efficiency issues express concern about the development of some of the
Department's energy efficiency standards. Given the need for all to use
energy more efficiently it strikes me that worthwhile standards for
appliances and other equipment should be developed as expeditiously as
possible.
Question 35. What plans might be under consideration that would
accelerate energy efficiency standards?
Answer. The delays experienced in the completion of the
Department's priority efficiency standards rulemakings are of concern
to me. They have been caused by a number of factors, including the many
complex analyses required by the governing statutes and DOE's
commitment to involve stakeholders during all stages of the standards
development process. I have directed that we accelerate those parts of
the standards-setting process that are within our control. The
Department takes its rulemaking responsibilities seriously, and we will
work to accelerate the standards setting process.
OFFICE OF SCIENCE
Question 36. Mr. Secretary, I am disappointed to see the
President's budget would decrease finding [sic] to the Office of
Science by nearly 4 percent. The Office of Science is the largest
source of government support for research in the physical sciences.
Although we are clearly in a period of budget constraints, I question
whether cuts in physical science research are in the long-term
interests of the United States.
The Office of Science budget request also reflects a higher
priority placed on operating funds for scientific user facilities than
on grants to researchers. In fact, the Office of Science budget
proposes a 10 percent cut for research grant funding overall. What are
the reasons for the larger cuts in research grant programs relative to
user facility operating funds? Do you expect this trend to continue in
future years?
Answer. After congressionally-directed projects, several of which
are unrelated to the Office of Science mission, are excluded from the
FY 2005 appropriation, the overall decrease for the Office of Science
in the FY 2006 request is 1.6%. In this overall budget climate, and
considering the President's commitment to cut the deficit in half by
the end of his term, I feel the Office of Science has been treated
quite fairly in this budget. We are positioning the Office of Science
for the future, with investments in new facilities needed to stay at
the forefront of science. However, these investments in facilities and
their operations have short-term consequences affecting our ability to
fund research. Facility operations are not reduced as much as research
in FY 2006 primarily because we have several new facilities coming on
line. The Spallation Neutron Source at Oak Ridge National Laboratory
will begin operations in FY 2006, as will 4 of the 5 Nanoscale Science
Research Centers: the Center for Nanophase Materials Sciences at Oak
Ridge National Laboratory, the Center for Integrated Nanotechnologies
at Sandia and Los Alamos National Laboratories, the Molecular Foundry
at Lawrence Berkeley National Laboratory, and the Center for Nanoscale
Materials at Argonne National Laboratory. The Spallation Neutron Source
will provide the most intense-by an order of magnitude-neutron beam in
the world for cutting-edge research, while the Nanoscale Science
Research Centers will provide tools found nowhere else in the world for
exploration at the atomic level, offering huge potential for the
discovery of entirely new ways to build materials. Over the next
several years, we will work to ensure that an appropriate balance
between research and facility operations is maintained.
I feel strongly that, for the long-term benefit of our nation, we
must achieve a greater parity between funding of the physical sciences
and funding of other fields of science. For instance, medical science
will depend upon basic research results from the physical sciences to
continue to achieve the extraordinary advances for which we all hope.
Mr. Secretary, the President's budget provides $259 million in
total funding. Much of the basic research to support the hydrogen
initiative is done through the Basic Energy Sciences (BES) program
within the Office of Science. The budget proposes $32.5 million for BES
research to support the Hydrogen Fuel Initiative.
Question 37. Enormous gaps remain between our present technical
capabilities in hydrogen production and storage, and the capabilities
required for a competitive hydrogen economy. Given the need for basic
research to generate breakthroughs, does the budget for the Hydrogen
Fuel Initiative focus enough on basic research?
Answer. The Department recognizes the significant gaps between
present technical capabilities and what would be required for a
competitive hydrogen economy. The proposed budget request of $32.5
million for basic research is commensurate with the targeted efforts,
and it maintains an appropriate balance with the applied research and
development efforts within the Hydrogen Fuel Initiative.
COAL RESEARCH INITIATIVE
Question 38. The President's budget proposes $286 million for the
Coal Research Initiative in FY06. This figure includes $18 million for
the industry cost-shared FutureGen program, to develop a zero-emission,
coal-fired power plant capable of producing both electricity and
hydrogen. Some of the technologies included in the FutureGen program,
such as integrated gasification combine cycle systems, are relatively
close to commercial readiness. The technologies needed for carbon
capture and storage are less fully developed.
Does it make sense to apply the same cost-sharing provisions to all
of the technologies included in FutureGen, regardless of their state of
development?
Answer. No, FutureGen follows general cost-sharing guidelines
similar to those applied to all our research activities and projects.
For basic research, cost-sharing in the range of zero to 20 percent is
sought from the participant. For applied research and development
activities and projects the cost-sharing is in the 20 to 50 percent
range. For demonstration projects such as in the Clean Coal Power
Initiative the cost-sharing requirement is over 50 percent. Depending
on the state of development of the technologies being tested in
FutureGen, e.g., whether in a research and development stage or
demonstration, the cost-sharing follow the guidelines as applicable.
The President's funding request for Industrial Technologies is 56.5
million, a reduction of $18.3 million from FY 05.
The Industrial Technologies Program seeks to reduce the energy
intensity of the U.S. industrial sector through research, development,
validation, and deployment of energy efficient technologies and
operating practices. The current budget purposes to focus less on
specific energy intensive industries--such as forest and paper
products, metals, glass, and chemicals--than it has in recent years.
Question 39. Why does the Department propose to decrease energy
efficiency efforts in specific, key industries that provide basic
materials? Aren't these the industries that should be emphasized in
energy conservation efforts, to maximize the return on our Federal
investment?
Answer. Because industry is less likely to invest in R&D toward
long term energy-savings technologies, our Industrial Technologies
Program is focusing on a fewer number of higher-risk, higher-reward
technologies, and our budget reflects that. Fortunately, the industrial
sector of the economy is already quite energy efficient, since it has
an economic incentive and the financial means to reduce energy use as a
component of its overall cost of production.
Question 40. What are the consequences on U.S. commercial
development and global competitiveness if High Temperature
Superconductivity R&D is not funded adequately?
Answer. The President's FY 2006 request for High Temperature
Superconductivity R&D supports a robust program. The consequence of a
lower program level would be delay, or even loss, of the ability to
develop advanced technologies needed to modernize and expand the
Nation's electricity system. Higher capacity, efficient high
temperature superconducting (HTS) power cables, transformers,
generators and other equipment is now being developed to support the
reliable, affordable electricity supply underpinning economic growth
and security. Inadequate funding would cause a loss in the scientific
and manufacturing leadership we now hold and would reduce participation
by U.S. companies in serving the $20 billion/year market for HTS power
equipment estimated by 2020. Global competition from active HTS
programs in Europe, Japan, China and South Korea is intense. For
example, this year, Germany's Hannover Fair will feature a
``Superconductivity City'' special exhibit.
FUSION SCIENCES
Question 41. The request for Fusion R&D is up 6 percent to $290
million overall. Funding for ITER, the international partnership to
build a large-scale fusion reactor, is up $50.6 million to $56 million.
I am concerned that as our financial obligations to ITER increase as
the project moves forward that these increases not be offset by
decreases in the overall budget for fusion science. Without a strong
base for fusion science in the United States, we will bring little to
the table to share with our partners as ITER moves forward.
I have no objection to participation in ITER, but only if the
administration is serious about the commitment. I do not regard flat
Science and Fusion Energy budgets as demonstrating serious commitment.
If our commitment for ITER is really $500 million, our spending on
this must ramp up in each of the next few years. When will we see a
serious commitment for ITER wherein its budget does not jeopardize our
Science Programs and other opportunities in fusion science?
Answer. The Total Project Cost for ITER as shown in the President's
FY 2006 Budget is $1.122 billion. The profile for the U.S.
Contributions to ITER project, also shown in the FY 2006 Budget, does
increase in the next few years. In the FY 2006 Budget, we are looking
toward the future to assure that cutting edge research facilities will
be available for the fusion community. As the Department develops its
FY 2007 budget, we will pay close attention to the balance between the
research and the facility development portions of the Fusion Energy
Sciences program.
STRATEGIC PETROLEUM RESERVE
Question 42. How important is it to increase SPR capacity from the
current 700 million barrel capacity to 1 billion barrels. What effect
will such an increase have on our nation's import protection?
Answer. The Strategic Petroleum Reserve affords the nation
strategic insurance against a severe energy supply disruption. It
enhances the nation's energy security, economic security, and elements
of national security and helps meet our international obligations. The
effect expansion of the SPR would have on the nation's import
protection would depend on many variables including world oil demand
and world oil supply.
SPR CONDITION
Question 43. Mr. Secretary, would you please comment on the current
condition of the maintenance, exercises and testing that allow the SPR
to maintain its operational readiness?
Answer. The SPR is fully operational and capable of delivering 4.4
million barrels of crude oil per day to the U.S. market with oil
deliveries commencing as early at the 13th day after a Presidential
finding that an emergency situation exists.
To ensure that their state of readiness is maintained, sites
conduct routine and major maintenance, tabletop exercises to review
procedures and checklists, inspection of facilities and equipment,
training, and systems test exercises.
We have every confidence the SPR facilities at all four storage
sites and all of our employees will be ready to draw down and sell our
oil inventory in an orderly, safe and secure fashion in the event of
direction from the President.
SPR BUDGET REDUCTION
Question 44. Additionally, I would be interested in your thoughts
on how a 2.2 percent budget reduction in FY 2006 for the Strategic
Petroleum Reserve would impact such readiness.
Answer. The small reduction in the FY 2006 budget from FY 2005 will
have no impact on the high state of Strategic Petroleum Reserve
readiness. The reduction is a result of a lower level of scheduled
major maintenance projects from year to year and to the scheduled
completion of oil fill activities during FY 2005.
The President's FY 2006 budget requests only $500,000 for the DOE
Hydropower program, a 90% decrease from FY 2005 funding levels. This
funding will enable the Department to terminate the program and
transfer the research, development, and demonstration results to
industry.
DOE's Hydropower program is a joint program between DOE and the
hydropower industry that began approximately 10 years ago with matching
industry funds. The program has mainly focused on the Advanced
Hydropower Turbine, which is designed to improve fish passage, increase
hydropower project efficiency, and result in power output increases.
Question 45. It is my understanding that full scale testing has
just begun on the Hydropower Program's Advanced Hydropower Turbine at
the Wanapum Dam in Washington.
Why has the Administration recommended to cut the Department's
hydropower budget by 90% in FY 2006 and to eliminate the program at the
end of the Fiscal Year--particularly when testing at the Wanapum Dam is
now underway?
Answer. The Department is fully funding this four year project to
test a new design hydropower turbine at the Wanapum Dam. Field testing
of the turbine is scheduled to complete early in the summer of 2005. FY
2006 activities will focus on analysis of test results, completing
final reports, and distributing the information to industry. With the
completion of these activities, the program will be complete, and no
additional resources will be needed.
Question 46. Does the Department believe this Program has achieved
useful results? Is Industry likely to continue this Program in light of
DOE's withdrawal from it?
Answer. Yes. The hydropower program has achieved significant
technical accomplishments in the area of turbine research. We believe
that industry is well positioned to continue the Department's efforts
at this point.
Question 47. Is DOE currently the only Federal agency engaged in
researching hydropower's role as a low-cost, renewable, domestic source
of clean energy?
Answer. The U.S. Army Corps of Engineers, U.S. Bureau of
Reclamation, Bonneville Power Administration, Western Area Power
Administration, and Tennessee Valley Authority all conduct hydropower
research activities.
Power Marketing Administrations
MARKET-BASED RATE PROPOSAL
The President's FY 2006 Budget proposes a dramatic overhaul of the
traditional PMA financing structure for the Southeastern Power
Administration (``Southeastern''), the Southwestern Power
Administration (``Southwestern''), the Western Area Power
Administration (``Western''), and the Bonneville Power Administration
(``Bonneville'').
The President's Budget proposes that all of the PMAs, including
BPA, phase in the use of market-based rates to their customers. The
Administration seeks to end the alleged subsidy to preference customers
and argues that this is not a proposal to privatize the PMAs. The
Administration proposes that any rate increase be capped at 20% per
year.
Question 48. As I understand the proposal, the cost of electricity
sold from federal dams could increase as much as 20% per year until the
rates are at an undetermined market level. Also, while the
Administration claims these rate increases will be gradual, OMB's
revenue assumptions show a 41% increase in revenues from the PMAs.
Isn't it hard to have a ``gradual'' rate increase with that type of
target? What does the Administration consider a ``market rate'' for
electricity?
Answer. With the exception of BPA, the PMAs generally make up less
than 5% of the power purchased by consumers in the areas they serve.
Because of this relatively small proportion of electricity retailers'
power the PMAs provide, even substantial increases in rates charged by
WAPA, SWPA, and SEPA will have only a small affect on end users. The
Administration is sensitive to the impact on end users and has stated
that in no case would any household receive an increase of more than
20% in a year. While the Administration's proposal is projected to
result in $12.4 billion in Federal deficit reduction over the next ten
years, the average consumer is expected to only see a slight increase
in their power bill. In fact, preliminary estimates point to average
annual increases far less than the proposed 20% cap--less than a 4%
average annual increase over the six-year adjustment period for end
users of the PMAs. This results in less than an eighty cents average
increase in the total monthly power bill for PMA end users in 2006.
The Administration is continuing to work on drafting the
legislative proposal discussed in the budget. Therefore, it would be
premature for me to address how ``market rates'' will be set under that
proposal.
Question 49. Has the Office of Management and Budget conducted any
precise studies regarding the impact of raising electric rates in
various electric markets?
Answer. No, only preliminary assessments using data from PMAs and
Government Accountability Office studies have been made about the
potential impact of the proposal in the President's budget.
Question 50. How do you respond to the claim made by public power
that market rate proposals are simply backdoor, discriminatory taxes,
which would fall inequitably upon rural America?
Answer. PMA rates have been held low for a number of years. The
proposal calls for PMAs to gradually increase their rates toward market
prices in the different regions that they serve. Therefore, PMA
customers would simply pay a similar price to what is being charged by
other electric utilities. Because many distributors buy power from a
variety of different suppliers, this proposal would result in only a
small gradual increase in average customer rates for most customers,
thus, we believe, having only small overall effects on the economic
activity in those parts of the Nation that currently receive PMA power.
Question 51. As you know, the federal projects providing
electricity to the PMAs are multipurpose projects. In addition to
electricity then, these projects provide water for fish and wildlife,
navigation, irrigation, recreation, and other uses. How will the advent
of market-based rates impact these other project purposes? Proponents
of public power fear that the government would hold the water it
currently has the flexibility to release in order to maximize the price
of power sold on the market. Please respond.
Answer. The PMAs, in coordination with the generating agencies (US
Army Corps of Engineers and Bureau of Reclamation), will continue to
schedule hydropower within requirements set by the generating agencies,
which balance the projects' multiple purposes. For example, under
normal operating conditions, the generating agencies determine project
operational (water release) limits including flow targets, pool
elevation targets, and minimum and maximum water release limits for
various time periods based on flood control, navigation, and
environmental requirements. The generating agencies may also establish
``ramp'' rates that govern the rate of change of the water releases or
pool elevations. Within these operating requirements, the PMAs can
exercise water release flexibility in order to optimize the benefits of
the power generated.
Because all of the projects are operated to satisfy multiple uses,
and none of the PMAs exercise sole and exclusive control over dam
operations, the PMAs would have limited ability to hold water for the
purpose of maximizing revenues. Any increase in price potentially may
stimulate more efficient use of hydroelectric power, but may also
stimulate increased usage of thermal electric generation and the
related environmental consequences.
Question 52. According to public power advocates, many current
customers find PMA power attractive because of the price only--not
because it is a hydropower resource. If the PMAs were to charge market-
based rates, isn't it possible that power customers may forgo purchases
of PMA power, thereby undermining a reliable revenue stream for the
Federal Government?
Answer. For Bonneville, Southeastern, and Western, some existing
customers that own or have access to generation at prices below
prevailing market levels may terminate their contracts for hydropower
sold by these PMAs. Other existing customers would likely retain their
hydropower contracts. I believe that hydropower priced at a market
level and that becomes available as a result of contract terminations
would be sold to interested existing customers, potential new
customers, or into regional spot markets for energy. Generally
speaking, under normal water conditions, the revenue stream should not
be adversely impacted.
However, Southwestern guarantees only a limited amount of firm
hydroelectric energy associated with the firm capacity that is sold to
its customers because of the characteristics of the hydroelectric
plants in its marketing area. Because this firm energy is limited,
Southwestern's customers already must acquire firm energy from non-
Federal resources to satisfy the total requirement to serve their
loads. To assure that this firm energy will be available when needed,
the customers may have to purchase some redundant firm capacity. As
Southwestern's rates approach market levels, the apparent total cost to
use Federal power will likely be above market because of the redundancy
required to incorporate Federal power into each customer's power
portfolio. There is the potential that Southwestern power may become
unmarketable under a firm power marketing plan, which would likely
result in Southwestern marketing its power on the spot market. Even
selling power on the spot market, it is virtually certain that
Southwestern would be able to find customers willing to purchase the
energy offered for sale. However, the price obtained for that amount of
power might be less than if it were sold under a firm power sales
contract, which would have a negative impact on its revenue stream.
Responses of Secretary Bodman to Questions From Senator Alexander
FUNDING FOR THE PHYSICAL SCIENCES
Question 1. DOE's Office of Science is the primary federal funding
source for research in physical sciences, but its budget request is
down -3.8% from last year ($3.60 B to $3.46 B). The base R&D program is
down 8% and 2000 fewer scientists and engineers will be funded by the
Office of Science next year. Because our economic competitiveness
depends on our ability to stay ahead of the science and technology
curve, how do you foresee the U.S. staying competitive when R&D
investments in the physical sciences--especially in the brainpower that
drives innovation--are in decline?
Answer. The President's FY 2006 budget request will maintain U.S.
scientific leadership within the current budget climate. In order to
achieve that goal, difficult decisions had to be made in prioritizing
research funding and facility construction and operations funding. This
request will provide continued opportunities for U.S. science and
scientists to remain at the cutting edge in FY 2006 and beyond. In FY
2006, the Office of Science will complete construction and commence
operations on the Spallation Neutron Source, a facility that should
make the U.S. a leader in materials science for more than a decade. We
will complete construction and begin operations at four nanotechnology
centers, and we will near completion on a fifth. We will also operate
two twenty teraflop capability supercomputers at Oak Ridge and operate
an upgraded capacity computing center for a broad range of science
users at the National Energy Research Scientific Computing Center
(NERSC) facility at Lawrence Berkeley National Laboratory. We expect to
begin fabrication of components for the ITER project, the next major
step on the challenging path toward eventually developing fusion as a
viable energy source. We will begin construction of the Linac Coherent
Light Source at the Stanford Linear Accelerator and will continue R&D
on the Rare Isotope Accelerator and on the International Linear
Collider.
The Office of Science is responsible for long-term, high-risk,
high-payoff facilities and programs aligned with DOE missions. We
support the research of approximately 23,500 graduate students, post
docs, and faculty, and our facilities are used by more than 19,000
researchers each year. We are the primary source of support for
physical science research in the U.S., providing 42% of federal
funding. Our FY 2006 budget request, we are confident, will continue
U.S. leadership in user facilities in a broad range of fields of
scientific endeavor and will help improve U.S. economic
competitiveness.
ADVANCED SCIENTIFIC COMPUTING
Question 1. I am supportive of the United States regaining
leadership high end computing. In 2004 DOE ran an open solicitation to
select the team to lead this effort and I'm proud to say the Oak Ridge
National Laboratory and its partners were selected and the home of the
new facility is ORNL's Center for Computational Sciences. The
facilities plan for the Office of Science ranks this as the #1 domestic
priority, second only to the international fusion project yet the
budget does not reflect a commitment to this goal
The total request for Advanced Scientific Computing Research is
down $25M dollars, funding for the Center for Computation Sciences is
down $42M but the request includes two new starts totaling about $21M.
Could you explain the reasons behind starting two new programs (for
SciDAC teams) within the advanced computing budget while failing to
find funds to keep high performance computing effort on track at Oak
Ridge National Laboratory?
Answer. The principles behind the budget decisions are to deliver
the most science for the Nation given the funds available. The Advanced
Scientific Computing Research (ASCR) budget includes $13 million for
research and evaluation prototype computers and $8 million for a new
competition for Scientific Discovery through Advanced Computing
(SciDAC) institutes. The research and evaluation (R&E) prototype
activity has been a part of the ASCR budget for a number of years. In
FY 2005 the Center for Computational Sciences (CCS) will complete the
evaluations that were funded in prior years. Therefore, we will solicit
proposals for new R&E prototypes in FY 2006. This type of activity was
strongly endorsed in the Federal Plan for High End Computing, which was
published by OSTP last May. The new competition for SciDAC institutes
will increase the scientific potential of our investments in applied
mathematics and computer science and respond directly to the direction
in the ``Department of Energy High-End Computing Revitalization Act of
2004'' to establish high end computing software development centers for
Leadership Class Computing.
Question 2. With the funding levels requested, will the U.S. still
be on pace to regain and sustain international leadership for open-
scientific Leadership-Class computing at the 100 Teraflop level and
beyond?
Answer. The President's FY 2006 request for the Advanced Scientific
Computing Research program is $30 million over the FY 2004 President's
Request and $3 million over the FY 2005 President's Request for the
same program, reflecting the priority of this effort in a fiscally
constrained budget. The funding in these years positions the Department
to deliver a leadership class computer for open science within this
decade.
Question 3. According to the Federal Plan for High-End Computing
issued by a Task Force consisting of all Federal agencies with a stake
in high-end computing ``. . . Leadership Systems are expensive,
typically costing in excess of $100 million per year to procure and
Operate . . .'' Given the Department's commitment to Leadership-Class
computing, would you provide insights as to why the budget request is
1/4th that level ($25 M)?
Answer. The budget of the Office of Science must balance a number
of elements to deliver the best science for the nation within the
current fiscal constraints. The $25 million for the Oak Ridge National
Laboratory Leadership Class Computing effort will enable researchers to
operate a 20 teraflop Cray X1e and a 20 Teraflop Cray XT3 (better known
as Red Storm) computer as leadership class resources for open science.
These computers will be allocated through an open process to a small
number of teams that are positioned to deliver new science on these
platforms. This multiple machine approach was what ORNL proposed and
what won the competition in FY 2004. The two systems will be the
largest systems of their type available to the open scientific
community in the U.S. They will provide more science than one large
system because some applications, such as plasma physics and global
change, perform significantly better on the X1e than on the XT3 while
other applications, such as materials science and chemistry, can
deliver more science per dollar on the XT3.
EXTERNAL REGULATION OF THE SCIENCE LABS
Question 4. Have you had a chance to consider the House Science
Committee's inquiry regarding external regulation of safety and health
issues at DOE's 10 science labs? If so, what are your initial thoughts
on the idea?
Answer. I plan to take a fresh look at safety, including the
proposal for external regulation of the 10 DOE Science Laboratories. I
firmly believe that the Department must continue to improve safety at
its laboratories. The safety record of the 10 DOE Science Laboratories
is very good, however, and has reflected steady improvements over the
past several years under the leadership of the Director of the Office
of Science, Dr. Raymond Orbach, who has made safety his first priority.
I will review the merits of external regulation of the Science
Laboratories with him and other advisors, including the senior
leadership of the Nuclear Regulatory Commission and the Occupational
Safety and Health Administration.
FUSION ENERGY
Question 5. The funding request for Fusion Energy Sciences is up by
about $16M but that increase and more are requested for the ITER
project. In order to support the request for the international ITER
project, the domestic fusion research would be cut by $34M and loss of
high-tech jobs. Is it wise to cut our domestic programs considering the
current delays in the ITER project?
Answer. If an agreement can be reached on the ITER site in the next
few months, then it will be possible to proceed on the schedule assumed
in the FY 2006 Budget, which envisions completing the preparatory work
in FY 2005 and the first half of FY 2006. That would allow us to make
profitable use of the funds requested for the Major Item of Equipment
project that is the U.S. Contributions to ITER project. Participation
in the ITER project will provide a major enhancement to our scientific
capabilities, thereby strengthening the U.S. Fusion Energy Sciences
program.
ITER itself will be a major fusion experiment addressing the
central scientific issue of burning plasma physics. We are reorienting
the domestic program and have added funds, above the FY2005 level, so
that the total effort directed toward plasma science issues, including
ITER, is increased. ITER is an investment in the future that will
enormously strengthen the plasma physics experimental capability
available to the U.S. fusion science community. We need to ensure that
the U.S. fusion program continues to be on the cutting edge of fusion
science, now and in the future, and this budget supports that goal.
Y-12 PLANT MODERNIZATION
Question 6. During the recent confirmation hearing, you commented
on the importance of modernizing the Y-12 National Security Complex in
Oak Ridge, Tennessee. Unfortunately, the President's Budget for FY 2006
significantly cuts or under funds key modernization activities. Can you
provide your perspectives on this situation?
Answer. Modernization of the Y-12 Nuclear Security Complex is a
major priority of the Department of Energy. Recent changes to the
Design Basis Threat (DBT) have caused us to re-think our strategy for
modernizing Y-12. Our plans for implementing the new strategy were
insufficiently developed to justify a more detailed request. Changes to
our strategy now include:
Uranium Processing Facility (UPF): Completion date is
tentatively set for 2013. Previously we had planned on
modernizing the production facilities using a phased approach
over a longer time line. However, the changing security
environment has caused us to make significant changes to our
strategy and to accelerate our previous schedule in getting
authorizations for the pending construction and startup of the
UPF. We are relocating all special nuclear material production
into a smaller, upgraded security perimeter with enhanced
defensive features.
Highly Enriched Uranium Materials Facility (HEUMF): We are
accelerating the HEUMF project within acceptable risk levels to
attain completion in 2008, which will allow relocation of
material into the facility in 2009.
Weapon dismantlement activities and materials processing
programs are accelerating their transformation of special
nuclear material into forms and volumes suitable for moving
into HEUMF.
Security Improvements Project: Will include critical
security upgrades for the interim period and critical security
aspects of the final UPF-HEUMF Special Nuclear Materials
Complex.
These changes are in addition to the previous baseline that
included HEUMF, parts of each of the items above, the Beryllium
Capabilities Project, an alternatively financed production interface
complex and public interface facility, and the start up of the
Purification Facility Project. The Facilities and Infrastructure
Recapitalization Project (FIRP) supports this baseline and the changes
above with a variety of upgrades and replacements to Y-12's
infrastructure systems, including the compressed air system, a life
extension to the steam plant, potable water system improvements and the
electrical distribution systems.
Future projects within the Y-12 modernization program currently in
the early stages of planning include Depleted Uranium/binary
Consolidation, Command and Control Complex, and consolidation of
special materials and general manufacturing. We are also planning for a
Decommissioning and Demolition program to stabilize and tear down aging
facilities. Funding to support these projects will be requested as the
plans mature sufficiently.
Question 7. Mr. Secretary, as you know, the June 2002 Agreement
between DOE and USEC committed DOE to support the construction of a new
uranium enrichment facility in Ohio using American Centrifuge
technology. USEC, in turn, committed to test and manufacture
centrifuges in Tennessee and deploy the American Centrifuge Plant in
Ohio on a mutually agreed schedule while continuing production
operations at the Paducah, Kentucky enrichment plant. I am encouraged
to see that the $3.4 billion invested by the taxpayer in centrifuge
technology will finally come to fruition. Significant progress has been
made by USEC in deploying the American Centrifuge technology, but a
long term lease of the DOE centrifuge facilities in Ohio, and a
centrifuge technology license, both of which have been under
negotiation for over a year, have not been completed.
Would you commit to seek closure on the long term centrifuge lease
and the technology license between DOE and USEC by the end of March of
this year? This would support the deployment schedule agreed to by both
parties, would help meet U.S. energy security needs and provide
centrifuge-related jobs in Tennessee and Ohio.
Answer. The development and deployment of the Government's uranium
enrichment technology at the DOE's Portsmouth Gaseous Diffusion Plant
site in Piketon, Ohio, is the direct result of a June 2002 Agreement
between the Department and United States Enrichment Corporation (USEC).
In that Agreement, USEC committed to firm milestones for USEC's
deployment of advanced enrichment technology in order to secure a new,
more economic source of domestic uranium enrichment.
To date, USEC has met, or exceeded, its deployment milestones. The
next Agreement milestone most related to the current lease and
technology license negotiations is in January 2007, when USEC is to
secure a financing commitment for an initial commercial plant. We
appreciate that the successful conclusion of the long-term lease
negotiations well in advance of that January 2007 milestone is critical
to meeting the milestone, and we are confident that will be achieved.
Because our objective is to develop a mutually acceptable lease and
technology license that will endure for the life of the commercial
plant's Nuclear Regulatory Commission license (50+ years), careful
drafting and consideration of a myriad of issues is required. The long-
term lease and license negotiating teams have made substantial progress
to date, but there are still a number of important issues that require
resolution. It would not be prudent for DOE to commit to closure of the
negotiations by the end of March. We will complete negotiations as
expeditiously as possible consistent with protecting the Government's
interests.
To help ensure that USEC's GCEP deployment milestones are not
impaired by the pace of the GCEP long-term lease or license
negotiations, DOE took several actions. In 2002, DOE authorized the
contractor that manages and operates the Oak Ridge National Laboratory
for the Department to enter into an expanded Cooperative Research and
Development Agreement with USEC so that USEC could have access to the
GCEP program scientists and technology that had previously been
Government-funded so USEC could further develop the GCEP technology.
Additionally, in February 2004, DOE granted USEC a temporary lease
through 2009 to selected GCEP areas at Portsmouth so it could freely
pursue its ``Lead Cascade'' activities. The Lead Cascade is already
licensed by the NRC, and USEC plans to incorporate the Lead Cascade
into the commercial enrichment plant when it is licensed. The
Department also is actively engaged in a program to accelerate DOE's
cleanup of the GCEP facilities to help accommodate USEC's deployment
plans.
Responses of Secretary Bodman to Questions From Senator Bunning
CLEAN COAL
Question 1. The Department of Energy has proposed $50 million for
the Clean Coal Power Initiative, which starts new projects every 2
years. Many in the industry believe that almost $300 million will be
needed for the next set of projects that will start next year. The
Department of Energy's Fiscal Year 06 budget falls short of that goal.
Is the Department going to be able to provide adequate and full funding
of the clean coal power initiative projects with this year's low
funding request?
Answer. The Fiscal Year 2006 budget supports the Department's
continuing effort to fulfill President Bush's 10-year, $2 billion
commitment to clean coal research, with funding for the President's
Coal Research Initiative (CRI) of $286 million, a $13 million increase
over the 2005 enacted level. The 2006 Budget brings the total requested
funding for clean coal research to $1.6 billion over five years, on
pace to exceed the President's ten-year pledge by more than 50 percent.
Within the President's Coal Research Initiative, the Clean Coal
Power Initiative (CCPI) is a key component of the National Energy
Policy to address the reliability and affordability of the Nation's
electricity supply, particularly from its coal-based generation. The
Fiscal Year 2006 Budget request includes $68 million for CCPI, $50
million of which is for demonstration projects and $18 million for
FutureGen, the world's first near-zero emissions coal-fueled power
plant. The Department believes the FY 2006 request is adequate to
maintain the overall schedule of the Clean Coal Power Initiative.
The $50 million allocated for the cooperative, cost-shared CCPI
demonstration program between government and industry will be devoted
to continuing the rapid demonstration of emerging technologies in coal-
based power generation, which should accelerate commercialization by
the private sector.
The CCPI's FutureGen research program will establish the capability
and feasibility of co-producing electricity and hydrogen from coal with
essentially zero emissions, including carbon sequestration and
gasification combined cycle, both integral components of the coal-
fueled power plant of the future. In addition to scheduled financing of
$18 million for FutureGen in Fiscal Year 2006, the Budget also includes
a commitment to FutureGen beyond 2006, by proposing $257 million to
become available in 2007 to provide the Federal share of FutureGen for
several years. This sum corresponds to unexpended funds available from
prior years' clean coal projects.
Question 2a. The DOE proposes transferring leftover Clean Coal
Power Initiative funding--approximately $257 million--to the FutureGen
program and then defers using that money until next year.
If Congress provides DOE this deferral funding, what will DOE do
with it in later years?
Answer. The Fiscal Year 2006 budget request for FutureGen asks for
$18 million to fund the project in Fiscal Year 2006 and for an advanced
appropriation of approximately $257 million that will be used to fund
the FutureGen project in subsequent Fiscal Years. According to the
initial project cost estimates presented in the table below, $257
million will fund the FutureGen project for Fiscal Years 2007, 2008,
2009, and into 2010.
----------------------------------------------------------------------------------------------------------------
FY
FY FY FY FY FY FY FY FY FY FY FY FY 16- Total
04 05 06 07 08 09 10 11 12 13 14 15 18
----------------------------------------------------------------------------------------------------------------
DOE Plant Funding.............................. 9 18 18 50 100 89 57 33 23 26 34 39 4 500
Industry Plant Funding......................... 2 7 7 20 38 43 32 18 18 19 19 24 3 250
DOE/Industry (80 max/20 min) R&D--Sequestration 24 24 4 34 34 .. .. ... 120
International Contributions.................... 5 6 8 10 10 12 12 7 7 3 80
----------------------------------------------------------------
Total...................................... 11 25 25 75 144 164 123 65 87 91 60 70 10 950
----------------------------------------------------------------------------------------------------------------
Question 2b. The DOE proposes transferring leftover Clean Coal
Power Initiative funding--approximately $257 million--to the FutureGen
program and then defers using that money until next year.
Why does the DOE not take some of the leftover Clean Coal Power
Initiative funding and fully fund that program instead of deferring
funding for future years?
Answer. The subject $257 million is from the earlier Clean Coal
Technology (CCT) Demonstration Program, not from the Clean Coal Power
Initiative (CCPI).
There are two principal reasons why DOE has not conducted another
Clean Coal Technology solicitation with the funds and is now proposing
to use available funds for FutureGen:
1. The funds only became available with the termination of
the City of Lakeland projects in 2003 and the CPICOR project in
2004. Prior to that time, most of the CCT appropriations were
committed to projects selected under the earlier CCT program
solicitations. Before the Lakeland and CPICOR projects were
concluded, DOE did not have sufficient uncommitted funds to
conduct a meaningful solicitation. Theoretically, DOE could
have attempted to prematurely terminate on-going CCT projects
to free-up money for a new solicitation. But that would have
been inconsistent with the long and successful history of the
program and could have been viewed as a breach by our
cooperative agreement recipients and stakeholders.
2. Historically, Clean Coal Technology solicitations were
directed by language contained in the Interior and Related
Agencies Appropriations Act. The same is true for CCT's
successor programs, the Power Plant Improvement Initiative and
the Clean Coal Power Initiative. DOE did not have direction to
conduct another solicitation with the funds that became
available under the Clean Coal Technology program.
DOE is now asking for a reprogramming of the available Clean Coal
Technology funds. We believe the best use of the funds is for FutureGen
as proposed. President Bush committed to invest $2 billion over 10
years to fund research in clean coal technologies. The scope of this
initiative included the CCPI, the FutureGen initiative, and other
advanced clean coal technology development efforts. All facets of this
program, from long-range research to commercial-scale demonstration,
advance clean-coal technologies to the point that the marketplace will
use them and benefits to society will be realized. The Department feels
that the 2006 Budget funding distributions within the overall clean-
coal portfolio is the optimal approach at this time.
Question 3. Five utilities in Kentucky have decided to not renew
their contracts with TVA. These companies, however, are facing not
having enough transmission because TVA does not want to continue
providing it to them. I have pushed hard to allow utilities who wish to
get out from underneath TVA and into a competitive market environment
to be able to do so. Lack of transmission may force these utilities and
others to stay with TVA's higher rates because they can't afford new
transmission. FERC has a pending case regarding this issue with East
Kentucky Co-operative. Does FERC have any authority to help these
utilities?
Answer. FERC has authority under Sections 210, 211, and 212 of the
Federal Power Act to order TVA to establish interconnections and
provide transmission service to parties seeking such service, provided
certain criteria are met. One such criterion provides that when an
electric utility, such as TVA, is prohibited from selling power outside
a specific area, it cannot be ordered to provide transportation
services to another entity if the electric energy to be transmitted
will be consumed within the area. This means that the scope of FERC's
authority with respect to the concerns of the five Kentucky utilities
depends on the circumstances of the individual utility and the actions
the utility wishes to take.
Question 4. The President's budget proposes granting FERC
jurisdiction over TVA's transmission system, similar to that which FERC
has over public utilities. TVA also is not subject to FERC jurisdiction
for its rates, charges, and terms, and therefore, is not subject to any
oversight other than by themselves and Congress. Placing TVA under FERC
would require it to be subject to the same regulatory requirements as
other utility companies. What do you think of FERC overseeing TVA for
how it operates its transmission grid and how it charges its customers
for wholesale electricity?
Answer. It is important to operate TVA's transmission system under
rules that ensure nondiscriminatory access for all market participants.
Therefore, the Administration proposes granting FERC jurisdiction over
TVA's transmission system.
Question 5a. The award of the cleanup contract at the Paducah plant
has been appealed which has further delayed the new contractor from
taking over cleanup at the site. The delay in obtaining a new
contractor and other factors may have slowed progress of cleanup at the
plant.
If funding is leftover from the previous year for cleanup at the
Paducah plant, what does DOE do with that money? Does DOE apply
leftover funds to the next fiscal year?
Answer. Funding for the cleanup at the Paducah Plant is
appropriated under the Non-Defense Environmental Services Non-Closure
Environmental Activities account and the Uranium Enrichment
Decontamination and Decommissioning Fund. In both of these
appropriations, according to Congressional language, the funds ``remain
available until expended.'' This means that any prior year funds which
are not expended during the fiscal year in which they are appropriated
will be available in the future years for that particular project.
However, in some years the congressionally mandated reductions direct
the Department to take proportional reductions against each program,
project, or activity. This means that no project or activity is exempt
and therefore may not have the full ``leftover'' funds which were
originally appropriated.
PADUCAH CLEANUP
Question 5b. Do you know if Paducah will have any leftover cleanup
funds from Fiscal Year 05?
Answer. At this time in FY 2005, it is premature to predict funding
that could be left at the end of the fiscal year.
Question 5c. Is Paducah still on target to meet the accelerated
cleanup deadlines?
Answer. Yes, we are on track to meet overall accelerated cleanup
deadlines.
COMMUNITY TRANSITION FUNDING
Question 6. The DOE has again proposed to zero out funding for the
Office of Worker and Community Transition. This program has the mission
of ensuring that communities can redevelop and sustain themselves
following the shutdown of a DOE facility. In anticipation of the
closure of the Paducah Gaseous Diffusion Plant scheduled for 2010, my
constituents in Paducah have worked hard to find ways to transition
their community through this difficult time. They rely on funding from
the DOE to help make this happen. Last year when you zeroed out this
funding, I was able to add some funds in another appropriation program
for the Paducah transition. But this is not adequate and does not
consider the other communities across the country who need help with
their transition. What do you feel DOE's role should be in assisting
community transition? What will you do to make sure that Paducah and
similar communities who were previously promised DOE funding can
successfully transition past the large impact of a DOE plant closing?
Answer. The community transition program was started to mitigate
the economic impacts on nearby communities caused by work force
reductions brought about by the end of the Cold War. The funding
assisted these communities in diversifying their economies by expanding
or creating new businesses in the communities. To date, the Department
has provided funding of approximately $255 million for the community
reuse organizations (CROs) across the country including $10.6 million
for the Paducah Area Community Reuse Organization (PACRO). The
Department has provided assistance to affected communities that has
resulted in the creation or retention of over 45,000 jobs. The
Department considers the mission of the community transition program to
be complete.
The Office of Legacy Management (LM) which incorporated the
functions of the former Office of Worker and Community Transition will
continue to provide technical assistance to PACRO and other CROs; and
will work with those that want to establish a personal property
transfer program. A personal property program uses DOE excess property
to help attract new businesses or expand existing businesses in the
community.
FREON FOR THE PADUCAH GASEOUS DIFFUSION PLANT
Question 7. I understand that USEC needs approximately 400,000 lbs.
of Freon transferred from Portsmouth to Paducah to meet operational
needs at the Paducah Gaseous Diffusion Plant. DOE has requested that
the transfer not take place until various legal and policy issues can
be resolved, DOE has been considering these issues since last July. Do
you believe DOE will resolve this issue expeditiously?
Answer. DOE representatives have been actively engaged in
discussions with United States Energy Corporation (USEC) concerning
USEC's request to use, at no charge, the federal government's Freon in
the DOE-owned, and USEC-operated Paducah Gaseous Diffusion Plant (GDP)
in Kentucky. USEC reports that over 400,000 pounds of Freon are
released into the atmosphere annually from the Paducah GDP.
Consequently, USEC has an annual requirement to replace lost Freon to
sustain Paducah plant operations. We expect to respond in the near
future to USEC's request for the transfer of 400,000 pounds.
POWER MARKETING ADMINISTRATION (CO-OP QUESTION)
Question 8. The Administration has proposed to raise the power
rates for Power Marketing Administrations, including the Southeastern
Power Administration (SEPA). The proposal increases the cost of
electricity sold from federal dams 20% per year until the rates are at
an undetermined market level. Much of this power goes to rural electric
cooperatives that operate at cost and so will have to pass it on to
their consumers in the form of a rate increase. Western and Eastern
Kentucky counties would be affected by this rate hike. This comes just
when the tax cuts are starting to help constituents. Why is the
Administration essentially putting a new tax on electricity for my
constituents?
Answer. The average consumer is expected to only see a slight
increase in their power bill. Preliminary estimates point to a less
than 2% average annual growth rate in the total power bill for the
average SEPA, SWPA and WAPA consumer over the adjustment period. PMA
rates have been held low for a number of years. The proposal calls for
PMAs to charge closer to the respective market prices in the different
regions that they serve. Therefore, your constituents should pay no
more than the rates charged by other electricity providers in the
market.
Responses of Secretary Bodman to Questions From Senator Bingaman
LOS ALAMOS NATIONAL LABORATORY
Question 1. When you went to Los Alamos, you stated your commitment
to a new contract for the laboratory that would, in your words,
``maintain--or even enhance--the scientific capabilities of the
laboratory.'' I think that you have put your finger squarely on what
should be the point of the whole exercise--to strengthen Los Alamos and
its scientific capabilities. And I think you would agree with me that
in a laboratory, the principal asset is the technical staff--the
scientists, engineers, and technicians who produce new knowledge and
apply it. Yet the latest set of changes that DOE has proposed in the
contract process seems to be greatly unsettling to precisely the people
who are the scientific capability of the lab. For example, even if the
University of California wins the competition, it will have to create a
new pension and benefits system for the laboratory, under contract
guidance to reduce benefits so as to eventually be about average for
other institutions deemed to be comparable to Los Alamos. For existing
workers, this means that they might have to retire to lock in their
benefits under the current system, including retiree health benefits.
Up to 2500 employees at Los Alamos could potentially be in this
retirement class, and I am informed that hundreds may already have
taken the first steps in the process of retiring as a result of all the
uncertainty that is hanging over the laboratory.
a. If you wanted to keep the best senior scientists now on the
staff, does it make sense to present them with a decision in which they
have to retire to preserve their pension and health benefits? Is it
really a good idea to force the laboratory's top and senior scientists
to actively consider and take steps to prepare to retire, if you really
want them to stick around to work on critical national security
problems?
b. You have publicly committed to us that you wouldn't reduce the
benefits for existing workers at the laboratory. How does this
commitment match up with the new contract guidance to reduce benefits
to an average level? Again, if you want the best mid-career personnel
to stay at the lab, does it make sense to greatly reduce their
benefits?
c. One way to reduce costs while maintaining the level of benefits
to existing workers is to have a different and reduced set of benefits
for new scientists and engineers hired at the laboratory. How would you
propose to attract the best and brightest to Los Alamos with merely
average benefits? Or, if they are going to be in the lower tier of a
two-tier benefits system? Doesn't industry make above average offers to
attract above average people? Why shouldn't DOE?
Answer 1a. I am committed to ensuring that the contract competition
results in an enhanced capability to perform science at LANL and meet
mission requirements. In addition, I fully agree that maintaining a
highly qualified staff at LANL is critical to the future success of the
Laboratory. It is the Department's intent to end up with pension and
health benefit plans under the new contract that are so similar to the
existing plan that current employees will elect not to retire.
The most recent proposal of the SEB to require a stand-alone
pension plan was precipitated by an industry perceived barrier to fair
and open competition. The requirement that the offeror establish a
separate corporate entity and a stand alone pension plan is similar to
Sandia National Laboratories (SNL), and other Departmental National
Laboratories, has proven to be a successful model for SNL and others in
their ability to recruit and retain a world class workforce.
Establishment of a separate corporate entity and a stand alone pension
plan will also enhance the Government's ability to ensure continuity of
benefits in future competitions and minimize any future employee
concerns. Although a stand-alone pension plan will be required, the
plan must be substantially equivalent, including current University of
California Retirement Plan (UCRP) age factors and will apply to current
employees that transfer to the new contract. None of the potential
offerors expressed concern about this requirement during the second
round of one-on-one discussions with the SEB or in their written
comments to the SEB white papers.
The final Request for Proposal (RFP) will require the contractor to
provide LANL employees and retired LANL employees with benefits
substantially equivalent to those in effect under the current contract.
In its contractually required review of the benefits package, the NNSA
will utilize a panel of experts to assure that benefits are
substantially equivalent and will provide for employee input to the
NNSA prior to finalizing negotiations with the contractor. In addition,
employees will be offered an extended transition period to allow them
time to carefully review and assess the equivalency between their
existing pension and health benefit plans with the substantially
equivalent new plans. It is to be expected that current employees are
exploring their options with their existing pension and health
benefits. I'm confident that the stand alone pension plan will (1) be
very attractive to the existing workforce, (2) allow retention of the
scientific and engineering workforce, (3) provide for a smooth
transition to the new operator of the laboratory, and (4) provide for
transportability in future contract competitions.
Answer 1b. I am still committed to protecting the benefits of
existing employees at LANL and the RFP is written to do that. As
described above, the new contractor must establish substantially
equivalent pension and health benefits for existing employees that
transfer to the contractor. Existing workers who transfer to the new
contract will not be included in any benefit value study hence ensuring
their benefits will continue to be substantially equivalent to what
they now have. I believe that the RFP has been crafted in a manner that
when employees, during the transition period, review their options they
will opt to remain at LANL continuing the culture of scientific
excellence we've come to expect.
Answer 1c. For new employees hired under the new contract, the
Department wants the contractor to consider developing a total
compensation package that is market driven and that will allow the
Laboratory to recruit and retain critical scientific and engineering
skills, and develop the next generation of scientific and technical
talent necessary to assure that LANL continues to perform world class
science. The Department considers market driven to be competitive in
comparison to the Laboratory's best in class comparator companies and
institutions as determined by the benefits value study. While aggregate
benefits in the range of 100-105 are considered average, it is
important to note that this average is based on benefits of best in
class comparator companies consisting of some of our Nation's most
premier companies and institutions which equates to above average to
outstanding total compensation packages. In addition, the contractor is
expected to develop and implement incentives that are common in
industry to attract and retain critically skilled employees. DOE
contractors have experience in recruiting best in class scientific and
technical talent, utilizing this concept, at other National
Laboratories including SNL.
Question 2. The decision that DOE will have to make about the Los
Alamos contract is pretty consequential to the Department's future. I
am concerned that the Source Evaluation Board that is driving this
process to date is not giving a lot of evidence they understand the
complex dynamics of running an institution that depends so much on a
very highly educated and qualified technical workforce.
a. Would you agree that integrating that perspective into the final
decision is important?
b. How might you strengthen that part of the decision-making
process?
c. I believe that, as Secretary, you can be the Selection Official
who makes the final call--would you consider playing that role with
this contract?
Answer 2a. Yes. The Department understands the complex dynamics of
managing the nation's nuclear weapons complex. The Source Selection
Official will ensure that his decision reflects all of the
considerations set out in the solicitation. The NNSA has staffed the
SEB with highly qualified, seasoned career employees that bring
extensive, diverse, and relevant experience to the SEB; they have no
preconceived bias about the outcome of the competition. The SEB
recognizes the key role that LANL serves in leading enhanced
communication, cooperation and integration across the nuclear weapons
complex. The SEB also appreciates the Laboratory's need for a highly
educated and qualified technical workforce; has taken numerous steps to
address the human resource issues raised by the workforce in order to
retain the LANL workforce needed to support world class science and
technology at the Laboratory; and, has followed recommendations of the
National Academy of Sciences and other nationally recognized science
organizations in developing the RFP.
Answer 2b. The SEB has created four advisory panels comprising
science and technology, business, laboratory operations and security.
The panel members are Federal experts well versed in their technical
disciplines and in all aspects of the Laboratory's operations. For
example, all of the science and technology panel members are Ph.D.s and
are the responsible federal program managers accountable for most
aspects of LANL's science and technology missions. Therefore, the SSO
will be provided with the best information possible that has been
gathered by the SEB using these experts to assist in the decision
making process. I have full confidence in the SEB that Ambassador
Brooks has designated to staff this procurement. Their experience and
qualifications spans the full spectrum of Laboratory mission and
operations.
Answer 2c. No, I do not believe that I need to be the SSO. The
Department will ensure the Source Selection Official (SSO) has the
experience and integrity to ensure that appropriate perspectives are
taken into account when the final decision is made.
Question 3. One concern that my staff has heard from managers at
Los Alamos and other labs is that the NNSA is making them implement
``earned value'' as a major metric for fundamental research. In
response to this requirement from DOE, managers at the lab are spending
an inordinate amount of time trying to figure out how to force-fit the
concept of ``earned value'' into the management of discovery-oriented
work. ``Earned value'' would certainly be a useful way to manage a
construction project--say, building a parking garage.
a. Do you think ``earned value'' really should be a principal
metric for managing fundamental research, such as the Science or
Engineering Campaigns in the Stockpile Stewardship Program?
b. Can you look into this problem and fine-tune the requirements
NNSA is giving in this respect?
Answer. The National Nuclear Security Administration (NNSA) has
spent the past few years improving program and project management
discipline in all of its activities. The portfolio of tools includes
the Planning, Programming, Budgeting and Evaluation processes, the
five-year national security plan (FYNSP) budgeting discipline, and
project management tools such as ``earned value''. The NNSA has not
required ``earned value'' analysis for fundamental research, although
we have applied it successfully for some campaign activities. A good
example is the Pit Manufacturing and Certification campaign that
experienced past difficulties with predicting and maintaining schedules
and costs that were needed to support stockpile deliverables. The NNSA
decided to ``projectize'' this campaign, which has led to a baseline
and improved predictability in cost and schedule. At this time, a
similar project-level schedule and management approach is being
developed for the Inertial Confinement Fusion campaign's ignition
activity to achieve similar benefit.
The tool may have wider application in the future. At this time,
the NNSA has not required project management and earned value for
campaign activities, but contractors may still choose to apply such
enhanced management in order to achieve similar goals internally. We
are also establishing a uniform management concept for Defense Programs
work. This includes a review of all of our research and development
with respect to activities that may most benefit from ``enhanced
management'' such as earned value reporting. These efforts are all
aimed at assuring the program activities are properly managed by Los
Alamos.
OFFICE OF SCIENCE
Question 1. Mr. Secretary--the Office of Science is building five
nanoscience centers which will be central to the United State's [sic]
effort to lead the world in nanoscience. I recently traveled to Taiwan,
and they already have one center operating. They have just finished
another center next to it that will be four times the size of the
center being built in New Mexico. These centers are located next to the
Hsinchu science park which has over 350 industries in the semiconductor
and display business generating $22 Billion in revenue. In addition,
the center transfers 800 students into the Hsinchu science park
annually, in addition to key scientific advances in semiconductor
technology.
Do you support a similar policy of insuring that these nanoscience
centers strengthen the competitive posture of key U.S. sectors such as
our optoelectronics industries (in particular solid state lighting)?
Answer. The Nanoscale Science Research Centers (``nanoscience
centers'') in the Office of Science have two primary goals: (1)
advancing science at the nanoscale, and (2) making available to the
broad scientific community state-of-the-art instrumentation and
facilities in a wide range of subdisciplines encompassed by nanoscience
and nanotechnology. The nanoscience centers were sited to take
advantage of both the instrumentation within the centers themselves and
the instrumentation of the host institution--the large x-ray, neutron,
and electron-beam scattering user facilities that exist at all of the
host institutions and the unique semiconductor and Micro-Electro-
Mechanical Systems (MEMS) fabrication facilities at the nanoscience
center at Sandia National Laboratories/Los Alamos National Laboratory.
Even now, prior to the commissioning and start of operations of the
nanoscience centers, their leaders are reaching out to the scientific
and technology communities, including industry. It is our hope and
expectation that the nanoscience centers will play a key role in
strengthening the competitive position of the U.S. in many industrial
sectors including optoelectronics.
Question 2. Mr. Secretary, as you are all too aware, the Office of
Science is the nation's largest funding source for the physical
sciences. This year the program had to significantly reduce the efforts
of U.S. fusion researchers to meet our commitment to participate in the
International Thermonuclear Experimental Reactor or ITER program. It is
my understanding that this reduction is on the order of 35 percent for
the use of U.S. fusion facilities.
Do you expect this trend of increased commitment to ITER and less
to U.S. facilities to continue in the out years?
Answer. The cost profile for the U.S. Contributions to ITER
project, as shown in the FY 2006 Budget, certainly does increase over
the next few years. As the Department develops budget proposals for FY
2007 and beyond, we will pay close attention to the balance between the
research and the facility development portions of the Fusion Energy
Sciences budget.
Question 3. Mr. Secretary--in the ``Strategic Highlights'' volume
of your Fiscal Year 2006 budget, page 7 shows a five year estimated
projection for the Office of Science. This projection has it decreasing
from $3.6 billion in this fiscal year to $3.36 billion five years out
in Fiscal Year 2010. Just to keep pace with inflation at 3 percent, the
Office of Science should have a baseline budget in Fiscal year 2010 of
$4.17 billion--so that is a $570 million difference in 2010 between
budget that simply keeps pace with inflation and the one estimated in
this volume.
Do you support this estimation and its steady decline in Science
funding?
Answer. As noted in the Strategic Highlights, those estimates ``are
generated by formula and do not reflect program policy decisions.'' The
Administration will review and propose an appropriate level of funding
for FY 2007 and beyond through its normal annual budget process.
EFFICIENCY--BUILDING CODES AND APPLIANCE STANDARDS
Secretary Bodman--let me ask you about Building energy codes and
equipment standards. A study conducted by the Lawrence Berkeley Lab for
the National Commission on Energy Policy found that upgraded building
codes and appliance and equipment standards could offset 25% of the
projected increase in building energy consumption projected for that
time period.
Yet the budget proposes cuts ranging from 19% to 31% in DOE's codes
and standards work. The appliance standards program is already woefully
behind schedule in meeting the requirements of the Energy Policy Act of
1992. Standards for at least 17 appliances are overdue. Many states are
now adopting their own efficiency standards; manufacturers are
concerned about these multiple, conflicting standards.
Question 1. What do you plan to do to get this program back on
track?
Answer. The delays experienced in the completion of the
Department's priority efficiency standards rulemakings are of concern
to me. I have directed that we accelerate those parts of the standards-
setting process that are within our control. The Department takes its
rulemaking responsibilities seriously, and we will work to speed up the
standards setting process.
STATE ENERGY PROGRAM GRANTS
Another example is the State Energy Program. The states leverage
the funds provided by DOE to develop programs that promote energy
efficiency and renewable resources and to provide energy emergency
planning. Your own budget document states that the program achieves an
annual energy cost savings of $7.23 for each $1 of federal funds.
Question 2. What is the justification for cutting energy program
grants to the states by over 7 percent?
Answer. The President's budget sought $40.8 million in FY 2005 and
$41.0 million in FY 2006 for the State Energy Program. We have
maintained a consistent level of funding requests.
The program was assessed using the Administration's Program
Assessment Rating Tool (PART) and received a rating of Results Not
Demonstrated, largely due to inability to demonstrate performance
against a set of acceptable performance measures. The Department is
working to develop such measures. The study estimating energy cost
savings from the program, conducted by Oak Ridge National Lab, is based
on extrapolations from limited data sets and includes important
assumptions. The study is a useful start, but it does not meet OMB Peer
Review guidelines. We are working to improve our estimate of program
benefits.
I would like to bring to your attention language in the FY2005
Omnibus conference report directing USAID, in consultation with the
Department of Energy and others, to develop a comprehensive strategy on
reforestation in Haiti.
In May of 2004, nearly 3000 Haitians were killed in flooding caused
only by moderate rains. In September, then Tropical Storm Jeanne killed
nearly 5,000 more Haitians. Storms in 2003 and 1998 also claimed many
Haitian lives due to flooding. There is widespread agreement that these
tragedies are directly linked to deforestation and that the
deforestation is directly linked to the lack of energy alternatives to
fuelwood.
I specifically sought to have the language requiring USAID to
consult with the Department of Energy included in the Omnibus report
because I think we need some fresh thinking on alternative energy in
Haiti and its critical role in any reforestation strategy. I think that
this is something in which the Department of Energy should play an
important role.
Question 3. Will you commit to devoting some resources and staff
expertise to the effort to develop that important report?
Answer. We look forward to assisting the U.S. Agency for
International Development (USAID) regarding the energy alternatives for
the Republic of Haiti. We stand ready to provide USAID technical
assistance to help devise a strategy for Haiti to use more alternative
energy resources to meet its energy demand.
Responses of Secretary Bodman to Questions From Senator Akaka
U.S. RADIOLOGICAL THREAT REDUCTION
At a September 2004 hearing before this committee, the Director of
the Office of Commercial Disposition Options, Office of Environmental
Management, Ms. Christine Gelles, stated that DOE had located the
responsibility for designating a permanent disposal facility for
Greater-than-Class-C waste to Environmental Management, yet I cannot
find evidence of this funding.
Question 1. Is there funding in the DOE FY 2006 Budget for the
activities needed to identify a permanent repository for GTCC sealed
nuclear sources, such as activities relating to an environmental impact
statement, and for the facility itself or a contract for disposal? If
so, where and how much?
Answer. DOE did not request funding in the FY 2006 Budget for the
Greater-Than-Class C (GTCC) waste disposal activities because carryover
funds (approximately $1.5 million) from prior years are sufficient to
fund the ongoing GTCC Environmental Impact Statement (EIS) activities
through FY 2006.
Question 2. Can you please confirm, for the record, that the
responsibility lies with Environmental Management and comment on DOE's
progress and plans to identify a process and site for these wastes?
Answer. The Office of Environmental Management is responsible for
completing the Greater-Than-Class-C (GTCC) Environmental Impact
Statement (EIS) and determining how the Department will meet its
responsibilities for disposing of GTCC waste. Current efforts are
focused on performing the necessary National Environmental Policy Act
(NEPA) analyses, including the development of an EIS. This spring, we
expect to issue an Advance Notice of Intent, which will request
comments from the public and interested agencies about the proposed
EIS, the preliminary range of disposal alternatives, and the potential
issues related to DOE's decisions for this category of waste. In
addition, we are in the process of developing updated inventories of
commercial GTCC waste and comparable DOE waste, which is essential for
analyzing potential disposal options. We also have entered into
discussions with the U.S. Environmental Protection Agency and the U.S.
Nuclear Regulatory Commission about their potential participation in
the EIS as cooperating agencies. Upon completion of the EIS, DOE will
issue a Record of Decision documenting how it intends to meet its
responsibilities to dispose of GTCC low-level waste. The entire EIS
process usually requires 1\1/2\ to 2 years from the issuance of the
formal Notice of Intent (which is expected to be issued later in 2005)
to the issuance of a Record of Decision.
GAS HYDRATES
Question 1. The Natural Gas Research and Development program was
rated ``Ineffective'' by the Program Assessment Rating Tool (PART),
which was developed by the Office of Management and Budget, because it
did not demonstrate clear results of research efforts. Were any
individual programs in the Natural Gas Technologies area successful? If
so, which ones?
Answer. The PART evaluated the Natural Gas Technologies Program as
a whole. The individual components of the program were not rated
separately.
Question 2. Given the recommendations of the bipartisan National
Commission of Energy and comments within the Administration's own
budget on the vast potential of gas hydrates as a source of energy,
please explain why this is such a low priority in the DOE budget. Is it
wise to discontinue all research in such an important area given our
countries reliance on fossil fuels and the vast potential reserves that
exist in the United States?
Answer. Budget discipline necessitated close scrutiny of all
Government Energy programs, using strict guidelines to determine their
effectiveness and compare them to other programs offering more clearly
demonstrated and substantial benefits. As a result, the 2006 Budget
proposes to conduct orderly termination of the program in FY 2006. This
is in line with our commitment to deliver results for the American
taxpayer.
Several other government agencies, specifically Minerals Management
Service (MMS), U.S. Geological Survey (USGS), National Oceanic and
Atmospheric Administration (NOAA), National Science Foundation (NSF),
and Naval Research Laboratory (NRL), support gas hydrate-related
research that is relevant to their missions. The Department of Energy-
Office of Fossil Energy is designated to lead the U.S. program by the
Methane Hydrate R&D Act of 2000 (2005 reauthorization introduced by
Senators Akaka and Murkowski). DOE is the only U.S. agency to focus on
production technology. The DOE has historically had an annual budget
about $10 million, and supports research and field studies with
industry, universities and other government agencies.
The USGS develops resource estimates and conducts seismic research
for arctic and marine gas hydrates. USGS is also assisting MMS and BLM
in developing a resource valuation methodology. USGS annual budget is
about $1.2 million, primarily for USGS scientists' salaries.
MMS is assessing the resource and value of hydrates for existing
and future Outer Continental Shelf (OCS) leases and supports University
of Mississippi Center for Marine Resources and Environmental
Technologies. MMS annual budget is about $1 million for staff salaries,
outside contractors and university researchers.
NOAA focuses on environmental and global climate change aspects of
gas hydrate. NOAA annual budget is less than $1 million, which funds
access to NOAA and Navy submersibles and remotely operated vehicles for
marine studies.
NRL focuses on geophysical technologies to detect marine hydrates
and participates in multinational seismic surveys and sample collecting
(Chile, New Zealand). NRL annual budget is less than $1 million for
salaries and some ship time.
NSF does not have a gas hydrate program but supports gas hydrate
research that is competitively selected in other research programs such
as offshore geology or geophysics. NSF also funds ship time of the
Integrated Ocean Drilling Program. NSF annual spending on gas hydrates
is over $1 million.
Question 3. Please provide a comprehensive accounting of all the
funds dedicated to climate change research across all programs,
initiatives, and line items (enacted in FY 2003 and 2004; and requested
in FY 2005).
Answer. The Department of Energy maintains a comprehensive
accounting of all funds that contribute directly or indirectly to
climate change science or technology. This accounting is done in
support of the Administration's multi-agency climate change science and
technology integration, planning and coordination initiatives, namely:
(a) the U.S. Climate Change Science Program (CCSP), led by the
Department of Commerce; and (b) the U.S. Climate Change Technology
Program (CCTP), led by the Department of Energy. The Department of
Energy's funding contributions to CCSP and CCTP, respectively, are
shown on the two attached tables, as enacted for the Fiscal Years 2004
and 2005, and as requested for Fiscal Year 2006. Criteria for including
activities in the CCTP are quite broad (see attached). In general,
activities that may lead to reduced, avoided, or sequestered greenhouse
gas emissions are included. Both research and deployment activities are
included in CCTP.
The Office of Management and Budget submits to Congress annually a
Climate Change Expenditures Report summarizing Federal spending on CCSP
and CCTP. The report also includes funding for international assistance
in support of climate change science, technology, or greenhouse gas
reduction, as well as related tax incentives proposed in the
President's Budget. This year's report is available on line at: http://
www.whitehouse.gov/omb/legislative/fy06_climate_change_rpt.pdf.
Attachment No. 1 to Question No. 3
October 14, 2003
Climate Change Technology Program Classification Criteria
Research, development, and deployment activities \1\ classified as
part of the Climate Change Technology Program (CCTP) must be activities
funded via discretionary accounts that are relevant to providing
opportunities for:
---------------------------------------------------------------------------
\1\ In this context, ``research, development, and deployment
activities'' is defined as: applied research; technology development
and demonstration, including prototypes, scale-ups, and full-scale
plants; technical activities in support of research objectives,
including instrumentation, observation and monitoring equipment and
systems; research and other activities undertaken in support of
technology deployment, including research on codes and standards,
safety, regulation, and on understanding factors affecting
commercialization and deployment; supporting basic research addressing
technical barriers to progress; activities associated with program
direction; and activities such as voluntary partnerships, technical
assistance/capacity building, and technology demonstration programs
that directly reduce greenhouse gas emissions in the near and long
term.
Current and future reductions in or avoidances of emissions
of greenhouse gases \2\;
---------------------------------------------------------------------------
\2\ Greenhouse gases (GHGs) are gases in the Earth's atmosphere
that vary in concentration and may contribute to long-term climate
change. The most important GHG that arises from human activities is
carbon dioxide (CO2), resulting mainly from the oxidation of
carbon-containing fuels, materials or feedstocks; cement manufacture;
or other chemical or industrial processes. Other GHGs include methane
from landfills, mining, agricultural production, and natural gas
systems; nitrous oxide (N2O) from industrial and
agricultural activities; fluorine-containing halogenated substances
(e.g., HFCs, PFCs); sulfur hexafluoride (SF6); and other GHGs from
industrial sources. Gases falling under the purview of the Montreal
Protocol are excluded from this definition of GHGs.
---------------------------------------------------------------------------
Greenhouse gas capture and/or long-term storage, including
biological uptake and storage;
Conversion of greenhouse gases to beneficial use in ways
that avoid emissions to the atmosphere;
Monitoring and/or measurement of GHG emissions, inventories
and fluxes in a variety of settings;
Technologies that improve or displace other GHG emitting
technologies, such that the result would be reduced GHG
emissions compared to technologies they displace;
Technologies that could enable or facilitate the
development, deployment and use of other GHG emissions
reduction technologies;
Technologies that alter, substitute for, or otherwise
replace processes, materials, and/or feedstocks, resulting in
lower net emission of GHGs;
Technologies that mitigate the effects of climate change,
enhance adaptation or resilience to climate change impacts, or
potentially counterbalance the likelihood of human-induced
climate change; and
Basic research activities undertaken explicitly to address a
technical barrier to progress of one of the above climate
change technologies.
Greenhouse gas emission reductions resulting from clear
improvements in management practices or purchasing decisions.
Note: Programs and activities presented for consideration can
include earmarks, but earmark descriptions and funding levels
must be clearly called out as such in the information provided.
Programs and activities funded by mandatory authorization
should not be included.
Specific examples of climate change technology activities include,
but are not limited to:
Electricity production technologies and associated fuel
cycles with significantly reduced, little, or no net GHG
emissions;
High-quality fuels or other high-energy density and
transportable carriers of energy with significantly reduced,
little, or no net GHG emissions;
Feedstocks, resources or material inputs to economic
activities, which may be produced through processes or complete
resource cycles with significantly reduced, little or no net
GHG emissions;
Improved processes and infrastructure for using GHG-free
fuels, power, materials and feedstocks;
CO2 capture, permanent storage (sometimes
referred to as sequestration), and biological uptake;
Technologies that reduce, control or eliminate emissions of
non-CO2 GHGs;
Advances in sciences of remote sensing and other monitoring,
measurement and verification technologies, including data
systems and inference methods;
Technologies that substantially reduce GHG-intensity, and
therefore limit GHG emissions;
Voluntary government/industry programs designed to directly
reduce greenhouse gas emissions;
Programs that result in energy efficiency improvements
through grants or direct technical assistance;
Attachment No. 2 to Question No. 3
FY 2004 TO FY 2006 SUMMARY DOE BUDGET: BASIC ENERGY RESEARCH'S
CONTRIBUTION TO THE CLIMATE CHANGE SCIENCE PROGRAM (CCSP), BY PROGRAM
AREA
[$ in millions]
------------------------------------------------------------------------
FY 2006
DOE/BER program FY 2004 FY 2005 request
------------------------------------------------------------------------
Climate Change Prediction Program $28.4 $27.2 $27.1
(CCPP)................................
Atmospheric Radiation Measurement (ARM) $44.3 $44.6 $46.3
Program...............................
ARM UAV Program........................ $2.9 $2.7 $2.7
Atmospheric Science Program............ $14.4 $12.8 $12.6
Terrestrial Carbon Processes & Ocean $15.4 $14.5 $16.6
Carbon Cycle Research.................
Ecological Processes Research.......... $15.8 $18.7 $18.7
Human Interactions Research............ $8.1 $8.1 $8.1
--------------------------------
Total.............................. $129.3 $128.6 $132.1
------------------------------------------------------------------------
Attachment No. 3 to Question No. 3
Table 4.--CLIMATE CHANGE TECHNOLOGY PROGRAM
Program Details by Agency/Account
(Discretionary budget authority in millions of dollars)
------------------------------------------------------------------------
FY 2004 FY 2005 FY 2006 $ change
actual enacted proposed 2006-05
------------------------------------------------------------------------
Department of Agriculture
Natural Resources Conservation 14 14 12 -2
Service--Biomass R&D, Section
9008 Farm Bill.................
Natural Resources Conservation 1 1 1 0
Service--Carbon Cycle..........
Forest Service R&D--Inventories 0 1 1 0
of Carbon Biomass..............
Agricultural Research Service-- 2 2 2 0
Bioenergy Research.............
Cooperative State Research, 5 5 7 2
Education and Extension
Service--Biofuels/Biomass
Research, Formula Funds,
National Research Initiative
\1\............................
Forest Service--Biofuels/ 0 2 3 0
Biomass, Forest and Rangeland
Research.......................
Rural Business Service-- 23 23 10 -13
Renewable Energy Program.......
Subtotal--USDA \2\.......... 45 48 35 -13
------------------------------------------------------------------------
Department of Commerce
National Institute of Standards 10 10 7 -2
and Technology (NIST)
Scientific and Technological
Research and Services..........
NIST--Industrial Technical 18 20 0 -20
Services, Advanced Technology
Program \3\....................
Subtotal--Commerce (NIST) 28 30 7 -22
\2\........................
------------------------------------------------------------------------
Department of Defense
Research, Development, Test and 15 51 43 -8
Evaluation, Army...............
Research, Development, Test and 17 11 7 -4
Evaluation, Navy...............
Research, Development, Test and 1 1 0 -1
Evaluation, Air Force..........
Research, Development, Test and 17 13 10 -3
Evaluation, Defensewide--DARPA.
Research, Development, Test and 2 0 0 0
Evaluation, Defensewide--Office
of the Secretary of Defense....
Subtotal--DOD \2\........... 51 75 60 -15
------------------------------------------------------------------------
Department of Energy
Energy Conservation............. 868 868 847 -21
Energy Supply--Electricity 73 103 84 -19
Transmission and Distribution..
Energy Supply--Nuclear.......... 309 394 416 22
Energy Supply--Renewables....... 352 380 354 -27
Fossil Energy R&D--Efficiency 455 388 405 17
and Sequestration..............
Science--Fusion, Sequestration, 333 371 399 28
and Hydrogen...................
Departmental Administration-- 0 0 1 1
Climate Change Technology
Program Direction..............
Subtotal--DOE \2\........... 2,390 2,505 2,506 1
------------------------------------------------------------------------
Department of the Interior
U.S. Geological Survey--Surveys, 1 2 2 0
Investigations and Research,
Geology Discipline, Energy
Program........................
------------------------------------------------------------------------
Department of Transportation
Office of the Secretary of 4 1 0 -1
Technology--Transportation,Poli
cy, Research and Development...
National Highway Traffic Safety 0 0 1 1
Administration.................
Research and Innovative 1 1 1 1
Technology Administration--
Research and Development.......
Subtotal--DOT \2\........... 5 1 2 1
------------------------------------------------------------------------
Environmental Protection Agency
Environmental Programs and 89 92 96 4
Management.....................
Science and Technology.......... 22 18 18 0
Subtotal--EPA \2\........... 110 109 113 4
------------------------------------------------------------------------
National Aeronautics and Space
Administration \4\
Exploration, Science & 227 208 128 -80
Aeronautics....................
------------------------------------------------------------------------
National Science Foundation
Research and Related Activities. 11 11 11 1
-------------------------------------
Total \2\................... 2,868 2,989 2,865 -124
------------------------------------------------------------------------
\1\ FY 2004 funding for Cooperative State Research, Education and
Extension Service--Biofuels/Biomass Research, Formula Funds, National
Research Initiative is an estimate and may change based upon updated
information as reported in the USDA Current Research Information
System (CRIS).
\2\ Subtotals and table total may not add due to rounding. Subtotals and
totals supersede numbers released with the President's 2006 Budget.
Discrepancies resulted from rounding and improved estimates.
\3\ The FY 2006 President's Budget proposes termination of NIST's
Advanced Technology Program.
\4\ Funding levels for NASA reflect full cost accounting. The decrease
in NASA's CCTP number in FY 2006 is due to realignment within its
Aeronautics Research areas.
Responses of Secretary Bodman to Questions From Senator Wyden
Secretary Bodman, at your confirmation hearing, you testified in
response to my question that you would commit to meeting the existing
Tri-Party agreement requirements to fully empty Hanford's leaking High-
Level Nuclear Waste tanks, which have already leaked over a million
gallons of nuclear waste, and are spreading contamination towards the
Columbia River.
However, in releasing the Department of Energy's Budget Request for
2006, you cited legal disputes over renaming High-Level Nuclear Waste
and leaving waste in the tanks as the budget justification for cutting
$267 million from Hanford clean-up funding. Despite your commitment to
me to honor the Tri-Party Agreement, the Department continues to
challenge requirements under Washington State law that the tanks be
emptied and leaks cleaned up--which mirror the existing Tri-Party
agreement.
Question 1a. Will the Energy Department honor the existing
agreements and legal requirements to remove as much waste as possible
from Hanford's leaking High-Level Nuclear Waste tanks to meet the 99%
standard in the Tri-Party Agreement?
Answer. DOE remains committed to meeting all Tri-Party Agreement
commitments, including these.
Question 1b. If you're committed to full cleanup of the High-Level
Waste Tanks, why did you cite disputes over leaving waste in the tanks
as a basis for cutting clean-up funds?
Answer. The Department requests funding needed to be successful in
meeting its commitments, recognizing that uncertainties can limit
cleanup activities. Budget requests are developed commensurate with
these uncertainties. At Hanford there are legal uncertainties
associated with tank closures that were brought on by Initiative 297
(I-297) in the State of Washington. I-297 and related lawsuits have
introduced uncertainties in the areas of waste importation; permitting;
and waste retrieval management and disposal activities at Hanford.
Additionally, since the State of Washington was not included in section
3116 of the Ronald W. Reagan National Defense Authorization Act for
Fiscal Year 2005, the Department is evaluating how to proceed. The FY
2006 budget request takes into account these legal uncertainties. In
addition, we have completed work associated with the waste tanks,
including removing pumpable liquids from the single-shell tanks at
Hanford.
Question 2. The FY 2006 Budget Request for Hanford clean-up would
cut spending by $268 million. Don't you agree that the public should be
given a chance to comment on these cuts? Will you commit to hold public
hearings on the Hanford clean-up budget in Portland and Hood River as
has been the practice for the past several years?
Answer. The public was able to comment on the FY 2006 President's
budget at a Hanford Advisory Board (HAB) workshop held on March 9,
2005. The public will also have the opportunity to comment on the
Department's budget request at a HAB workshop and public meeting on
budget priorities for FY 2007 currently scheduled for March 30, 2005,
in Richland, Washington, as well as at other Hanford Advisory Board
meetings held throughout the year in Yakima, Richland, and Seattle,
Washington, and Portland, Oregon.
Responses of Secretary Bodman to Questions From Senator Landrieu
PETROLEUM AND GAS R&D SUBMITTAL
Question 1. Within DOE's Fossil Energy Budget is the request for
Petroleum and Gas (Supply) R&D. Please provide an explanation of each
item under petroleum and gas R&D that was funded in FY 2005--what was
the project specifically funded for in FY2005--a paragraph on each item
will be helpful.
Answer. The following provides the requested information.
Oil and Natural Gas FY 2005 Projects
NATURAL GAS TECHNOLOGIES
Exploration and Production
Advanced Drilling, Completion and Stimulation
In FY 2005, Deep Trek projects for high temperature electronics,
super cement, and advanced Measurement While Drilling (MWD) will
complete prototype development. Research in enhanced telemetry and
active drilling vibration dampeners will be completed. Benchmarking of
drilling fluids and bits for extreme High Temperature-High Pressure
(HT-HP) environments will be completed. Participants include: NETL, APS
Technologies, MASI Technologies, Honeywell, Schlumberger, E-Spectrum,
Novatek, Mauer, Cementing Solutions, Terra Tek, GTI, TBD.
Advanced Diagnostics and Imaging Systems
In FY 2005, conduct work on projects selected in the Advanced
Diagnostics and Imaging area, which investigate improved methods of
imaging deep gas targets to improve industries success rate of finding
new gas. A geologic play book for the Trenton-play in the Appalachian
basin will be completed and work on resource assessments of deep plays
in Alabama will be conducted. Participants include: 3DGeo, Paulsson
Geophysical, WVU Research Corp, RSI, Technology Intl., U. Alabama, U.
Texas (BEG), TBD.
Multi National Laboratory/Industry Partnership
In FY 2005, funding will conduct work on projects focused on
advanced drilling, and MWD and Logging while Drilling (LWD) tools.
Stripper Well Revitalization
In FY 2005, DOE will conduct work on the National Stripper Well
Consortium involving industry and the research community to investigate
multiple technologies to improve stripper well production to prevent
abandonment. In addition, DOE will support industry-led efforts in
technology transfer through workshops and publications focused on the
small- to mid-sized independents. Participants: Penn St. University.
Technology Transfer
In FY 2005, funding will conduct work on industry led efforts in
technology transfer. Participants included: Petroleum Technology
Transfer Council (PTTC).
Deep Trek
In FY 2005, conduct research on developing critical high
temperature electronic components and an advanced high temperature MWD
system needed by industry to drill and complete deep gas wells.
Participants included: Honeywell, Schlumberger.
Liquefied Natural Gas
In FY 2005, DOE will conduct analyses of the economic impact of LNG
supplies in the U.S. market and specific safety and security issues
related to the delivery of LNG to terminals in the U.S. A federal task
force will be established to streamline the LNG terminal approval
process. Participants include: Conversion Gas Imports, GTI/University
of Arkansas, New York State Electric and Gas, DOT/OPS, Coast Guard,
MMS, FERC TBD.
Arctic Research
In FY 2005, conduct work through the Arctic Energy Office
supporting natural gas development in Alaska.
Gas Hydrates
In FY 2005, the program will conduct work on its assessment of gas
hydrates to analyze seafloor stability and safety issues and the
potential resource in the Gulf of Mexico through an ongoing joint
industry project to collect deep stratigraphic cores from hydrate
formations as well as continue the development of instrumented arrays
for future deployment in the Gulf of Mexico. Characterization well
sites will be prioritized in Alaska to assess the hydrate resource.
Scientists at NETL and other national labs will conduct work on hydrate
characterization. Participants include: Chevron Texaco, U. Mississippi,
BP, U. Alaska, USGS, MMS, NOAA, NSF, NETL, National Labs.
Infrastructure
Storage Technology
In FY 2005, DOE will conduct work on an industry-led consortium in
gas storage and conduct work on developing an advanced method for
developing cavernous storage in carbonate formations. Participants:
Penn State University and Clemson University.
Delivery Reliability
In FY 2005, conduct research on ensuring the reliability and
integrity of the gas transmission and distribution network, developing
smart automated inside pipeline inspection sensor systems, obstacle
detection systems for horizontal boring applications for laying
distribution pipelines, developing systems capable of detecting
external force damage, developing technology to improve the efficiency
for reciprocating and turbo compressors, and developing advance
technology capable of determining pipeline wall integrity. Participants
included SwRI, Tuboscope, NYGAS, GTI, Battelle, CSU, ARC, ANL, INEEL,
LLNL, SNL, ORNL, PNNL, NETL.
Effective Environmental Protection
Environmental Science
In FY 2005, conduct work on targeted initiatives to define and
solve specific problems in key focus areas, specifically: 1)
environmental barriers to coal bed methane production, and 2) air
quality issues affecting natural gas production. Develop objective,
credible data for regulatory decisions as part of a program-wide
environmental strategy for maintaining sustainable supplies of natural
gas. Participants include: NETL, National Labs, TBD.
Oil and Natural Gas FY 2005 Projects
OIL TECHNOLOGY
Exploration and Production
The program focuses on development of technologies to economically
recover the oil remaining in mature fields by expanding the technology
options for enhanced oil recovery. In FY 2006, the program will orderly
terminate all Oil Technology activities.
EOR/CO2 Injection
In FY 2005, conduct work on short and long term efforts to enhance
utilization of industrial CO2. The strategy is to increase
the adoption of `best practices' to opportunities existing in the near-
term. Specifically, basin-wide strategies will be examined to identify
ways to lower cost and accelerate infrastructure development to cost
effectively deliver CO2 from industrial sites to candidate
oil fields; this effort includes resolving potential permitting and
regulatory issues. Participants include LBNL, LANL, NETL, TBD.
Diversity of Global Oil Supply
In FY 2005, conduct work on diversification of international
sources of oil supplies through bilateral activities with nations that
are expanding their oil industry, including Norway, Canada, Mexico, and
others. Bilateral and multi-lateral work will include technology
exchanges and joint research, development and demonstration under the
Administration's North American Initiative and other international
agreements. Participants to be determined.
Advanced Drilling, Completion and Stimulation
In FY 2005 conduct work on upgrades to the Advanced Cuttings
Transport Facility that allow high-temperature/high-pressure
experimentation on energized fluids (air, mist, gas assisted, foam,
etc.) and synthetic drill fluids, cements, and transport of fluids in
horizontal and inclined wellbores. Participants included: Northrop
Grumman, University of Tulsa, DEA, APS Technology, Impact Technologies,
National Labs, NETL.
Advanced Diagnostics and Imaging Systems
In FY 2005, conduct work on development of advanced reservoir
diagnostics and imaging systems to optimize oil discovery and recovery.
Develop quantitative engineering parameters that control rock-fluid
interactions which impact oil production. Complete work on fundamental
geoscience efforts focusing on geoscience/engineering reservoir
characterization on naturally fractured reservoirs. Participants
included: Cal Tech, Northrop Grumman, Univ of Houston, Univ of Kansas,
CSM, Stanford Univ, Univ of TX @ Austin, Mich Tech, Univ of Illinois,
MT BOM, NMIMT, Western Michigan Univ, Adv Resources, Wm Marsh Rice
Univ, NETL.
Multi-National Laboratory/Industry Partnership and
National Laboratory Supporting Research
In FY 2005, conduct work on the transfer of technologies that
advance understanding of the characteristics and producibility from oil
reservoirs. Participants included: National Labs.
Reservoir Efficiency Processes
In FY 2005, conduct work on development of improved gas flooding
recovery methods and advanced the state-of-the-art in reservoir
simulation. Participants included: NETL, Northrop Grumman, NMIMT, Univ
of TX, Cal Tech, Univ of OK, Univ of Kansas, Univ of TX @ Austin,
Stanford Univ, Correlations Company, Adv Resources Intl, Univ of Utah,
Univ of Pitts, Univ of Houston, Univ of Oklahoma, TBD.
Arctic Research
In FY 2005, conduct research on the oxygen transport membrane being
conducted at the University of Alaska, Fairbanks. Complete research in
oil-related projects through the Office of Arctic Energy including
tundra travel model for the North Slope of Alaska, characterization and
alteration of wettability states of Alaskan reservoirs, and physical,
biological and chemical implications of mid-winter pumping of tundra
ponds. Participants included UAF, AK Dept. Natural Resources, TBD.
Russia Technology Program
In FY 2005, conduct work on the Russian Cooperative Research
Program including one or more of the following technology focus areas:
USGS-Russian Offshore Arctic Resource Assessment; World Bank Global Gas
Flaring Initiative; Arctic Construction and Operations Technology
Transfer Initiative; ``Full Value Chain'' Oil Spill Restoration;
Prevention, and Response Program; and/or, U.S.-Russia Commercial Energy
Summit Education Initiative. Participants: TBD.
Reservoir Life Extension/Management
Domestic Resource Conservation
In FY 2005, conduct work on the following elements: 1) Key
technology prototype development, such as micro-hole technologies, for
enabling improved access and minimizing environmental impact; 2)
Technology transfer with special emphasis on independents; and 3)
Policy analysis and planning to prioritize program efforts and provide
policy evaluations to maximize impact on domestic oil recovery over a
wide range of technological and economic conditions. Participants
include PTTC, Northrop Grumman, CDO, Univ of Kansas, Penn State, NETL
and TBD.
Effective Environmental Protection
The Effective Environmental Protection focuses on technologies and
practices that reduce the environmental impact of oil exploration,
production, and processing while minimizing the cost of effective
environmental protection and compliance. The program supports energy
security by helping to overcome the environmental barriers that limit
access to domestic resources. The program also supports the President's
Clear Skies Initiative by reducing emissions from oil production and
processing. In addition, the program supports the recommendations of
the National Energy Policy by encouraging additional recovery from
existing wells, providing technology to allow additional oil
development on Federal lands and providing answers to environmental
questions that are limiting oil exploration and production in the
National Petroleum Reserve--Alaska. Activities have provided a complete
examination of specific impact of produced water and the more general
problem of water management. A detailed roadmap of the necessary
actions has been presented in a public workshop for discussion and
inclusion of stakeholder views. The overall objective has been to help
balance the need to develop the Nation's energy resources while
maintaining our environmental values. This program has filled critical
information and technical gaps that are needed to meet the Nation's
energy needs without sacrificing environmental quality.
Environmental Science
In FY 2005, conduct work on targeted activities to define and solve
specific problems in key areas, specifically: 1) management of produced
water and technology development that makes produced water a resource
for beneficial uses; and 2) ensuring maximum sustainable access to oil
resources on Federal lands. Participants include: KS State Univ,
Northrop Grumman, TX-EES, Univ of N Carolina, Univ of TX at Austin,
IOGCC, GWPC, CSM, CDO, NETL, LBNL, LLNL TBD.
Question 2. Do you support the President's view for the
modernization of America's transmission grid and the critical role to
be played by superconductive transmission cables in this effort as
outlined in the National Electric Delivery Technologies Roadmap report
released last year.
Answer. Yes. Last year we launched a superconductive cable that
should result in first-of-a-kind cables being installed by electric
utilities in Columbus, OH, Albany, NY, and Lond Island, NY. Each
project will demonstrate the advantages offered by high capacity
superconducting cables (3 times or more than that of conventional
cables) in improving power flows and optimizing grid operations. Each
cable is planned to be operated on the grid in 2006--but each have
different designs addresses the formidable challenge of providing more
power through the same right-of-way meeting customer's growing demands
for more electricity. And, Columbus cable demonstrates the most compact
3-phase cable in the world. The Albany cable is the first cable in the
world to be tested using an improved type of superconducting wire being
developed in the program. These cables offer strategic benefits to
utilities and a potentially cost-effective means for repowering
existing electric delivery infrastructure.
Responses of Secretary Bodman to Questions From Senator Cantwell
Question 1. Your electric transmission and distribution budget cuts
budgets nearly 20% from the budget. These cuts compromise important
initiatives underway with including projects underway in the Pacific
Northwest with the Pacific Northwest National Laboratory. I strongly
support these programs including GridWise and GridWorks programs and
seek your support.
Can you explain the cuts and justify how we can cut funding for
these important programs given the necessity to ensure a reliable
transmission system?
Answer. The OEEA FY 2006 budget request of $95.6 million is a 19
percent reduction to the FY 2005 enacted level. However, the FY 2005
enacted level includes $51 million in congressionally-directed
activities. When the FY 2005 level is adjusted for this, the FY 2006
request reflects a slight increase.
If we compare the President's FY 2005 request to the FY 2006
request, the total amount requested for GridWorks and GridWise is the
same. This reflects the Administration's continued commitment to these
programs, and their potential contribution to the reliability of the
electric grid.
Question 2. As you may know, I sponsored legislation in the last
Congress to support the Genomes to Life program at the Department of
Energy. I strongly support an expanded program and development of
research centers to support this goal. Last year, the Office of Science
released a Twenty-Year Facility Outlook that included four Genomes to
Life centers. The FY05 Energy and Water Development appropriation
includes $10M to begin preliminary design of the first facility.
Does this budget keep us on track to meet the 20-year strategy,
including the four GTL centers and what specific progress will be
accomplished in FY '06?
Answer. Yes, this budget does keep us on track to meet the strategy
for the 4 GTL centers described in the Twenty Year Facility Outlook. In
FY 2006 we will continue fundamental research that will underpin
technologies central to the first GTL facility and will complete the
majority of the project engineering and design work. We have also
received an application from the National Academies to review the
Genomics: GTL program, including plans for the 4 facilities, and hope
to have at least an interim review completed in FY 2005 or early FY
2006.
Question 3. The Environmental Molecular Laboratory at the Pacific
Northwest National Laboratory opened its doors seven years ago and has
experienced sustained growth in user participation. Today, over 2100
scientists from the U.S. and around the world utilize EMSL's
extraordinary capabilities. However, flat funding creates difficult
challenges when investments need to be made in order to keep the
instrumentation refreshed, bring on line new capabilities, and serve
the user community.
EMSL is the flagship user facility for the Office of Biological and
Environmental Research. Can you provide specific explanation for
cutting the Biological and Environmental Research portion of the PNNL's
budget?
Answer. I agree that the EMSL facility provides extraordinary
capabilities for scientists around the world, and the flat funding
provided for EMSL while other activities are reduced is a strong
indicator of my support for this facility even within tight budgets.
The Biological and Environmental Research Advisory Committee will
conduct a thorough review of EMSL, for both science and user facility
infrastructure in June. This review will help DOE and PNNL management
set future priorities and resource allocations for the EMSL. Also,
while the budget request for PNNL has been reduced by $2,205,000 from
just over $84,319,000, I anticipate that PNNL will continue to compete
successfully for new, merit-reviewed funding opportunities in FY 2006
as it has in the past.
DOE procurement decisions are being challenged and overturned.
Question 4. What actions are you taking to improve the quality,
fairness, timeliness, and success of the DOE procurement process,
specifically for River Corridor and FFTF?
Answer. The Secretary has ordered a review of the procurement
process. This review is currently being conducted. We would be happy to
meet with you after the review is completed and the Secretary has made
his determination.
SMALL BUSINESS DOE PROCUREMENTS
Another major concern on the part of many of my constituents is
whether DOE is implementing the President's directive to increase
government procurements with small business.
Question 5. What are you doing to improve and expand DOE
procurements that benefit small businesses, particularly those based in
the local communities most affected by contamination and which will
suffer severe economic impacts when cleanup is done if local,
sustainable businesses are not developed?
Answer. We believe that the most-effective way to foster
sustainable small business entities is to give them the opportunity to
participate as prime contractors in providing critical mission-related
services. To date, DOE is in the process or has completed five small
business competitive procurements for site cleanup. In addition, DOE
has awarded 22 small business contracts for decontamination,
deconstruction and removal and remediation services as part of its
Indefinite Delivery/Indefinite Quantity (IDIQ) contracting approach.
The total value of all these contracts will be in excess of $1 billion.
In contracts not set aside for small business firms, DOE has taken
steps to increase small business participation in the cleanup program.
For example, selection of cleanup contractors at larger sites is based,
in part, on the extent to which small businesses participate in
performance of the contract work scope. The request for proposal to
clean up a large site requires the submission of a Small Business
Subcontracting Plan that includes a minimum goal of 30 percent for
small business subcontracting of the total contract value.
Also, cleanup contractors at DOE sites have entered into Mentor-
Protege relationships with small businesses in the local community to
develop and expand their capabilities and groom them to participate in
future contract awards. Scheduled meetings are held locally to provide
a forum for small business firms to learn more about the Department's
contracting opportunities. In addition, Federal and site contractor
Small Business Program Managers are available to counsel small business
firms on an on-going basis.
SMALL BUSINESS CONTRACTING
Question 6. Will you support efforts to expedite evaluations of
procurement involving local small businesses-particularly since
extended delays are especially harmful to small companies that don't
have the resources to keep teams mobilized?
Answer. Yes. I fully support the use of approaches that expedite
the competitive procurement process, consistent with Government-wide
procurement and small business policies. Accordingly, I will ensure
that such approaches are employed to the maximum extent practicable in
Department of Energy procurements. To this end, I have tasked the
Department's Chief Acquisition Officer to review procurement actions
reserved for small business participation to identify needed
improvements in the process and promptly implement remedial actions.
Responses of Secretary Bodman to Questions From Senator Corzine
Question 1. Secretary Bodman, as I mentioned before, I am the only
Senator on this committee from a state affected by the 2003 blackout.
More than one million New Jerseyans lost power as a result of a power
surge more than five hundred miles away. All in all, 50 million
northeasterners were left in the dark.
It quickly became clear that many sections of our national
transmission infrastructure had not been keeping pace with the nation's
increased demand for electricity. President Bush called the blackout a
``wake-up call'' to modernize the electric grid. In the weeks that
followed, everyone agreed that we needed increased development and
deployment of new transmission technology.
That is why I was shocked to learn that the President's budget cuts
the Office of Electric Transmission and Distribution by nearly twenty
percent. This is not just a minor belt tightening, this is an enormous
reduction in our nation's ability to prevent another blackout.
Every major research account within the office of Electric
Transmission and Distribution has been cut: transmission reliability
R&D has been cut by 41%, and the account responsible for transforming
the power grid into a reliable, adaptive power network has been cut by
25%. Furthermore, superconductivity research has been cut by nearly 20%
and energy storage R&D has been cut by almost 25%.
Secretary Bodman, considering the security, economic and public
health impact of a catastrophic failure of the grid, what do you
believe the role of the federal government should be in electricity
reliability research and development?
Answer. The FY 2006 budget request of $95.6 million is a 19 percent
reduction to the FY 2005 enacted level for OEEA programs. However, the
FY 2005 enacted level includes $51 million in congressionally-directed
activities. When the FY 2005 enacted level is adjusted for this, the FY
2006 request reflects a slight increase. and development.
The Department created the Office of Electric Transmission and
Distribution to lead the effort to modernize the Nation's grid. Since
2003, we have devoted roughly $180 million to developing more reliable
and efficient grid technologies, including High Temperature
Superconductivity to make transmission more efficient, a real-time Wide
Area Monitoring System for the Nation's Eastern Interconnect to make
the grid more reliable, end-use demand response capabilities to relieve
peak loading and reduce costs, and advanced energy storage technologies
to make the grid more adaptable to demand. Two new activities have been
developed that promise to better integrate advancing power
technologies. First, GridWise develops real time controls, advanced
communications and information software technologies for electric
distribution and end use. Secondly, GridWorks develops advanced
hardware technologies, including cables and conductors, substation and
protective systems, power electronics, and sensors.
OFFICE OF SCIENCE CUTS
Question 2. Secretary Bodman, as you are well aware, New Jersey is
one of the nation's leading states in high-tech research. Princeton
University and Rutgers University in particular, have been large
beneficiaries of the Office of Science's laboratories and funding. The
Princeton Plasma Physics Laboratory, one of our nation's leaders in
developing fusion-based energy, continues to make breakthroughs with
funding from the Office of Science.
Over the past twenty years, funding for government research and
development increased rapidly. Life sciences research at the National
Institutes of Health has increased five-fold, and defense research at
the Office of Science has declined in constant dollars.
Secretary Bodman, can you explain what priority you place on
physical sciences research? Do you agree that federal support for
research in other science should continue to significantly outpace
support for the physical sciences?
Answer. We are all proud of the excellent work that has been done
at the NIH to improve the health of all Americans and keep the U.S.
pharmaceutical industry and our national healthcare system at the
forefront of world medicine. That said, the Department of Energy's
Office of Science also plays a key role in the biological sciences. We
are the founder of, and an important participant in the sequencing of
the human genome, and we also perform research at the nexus of physics
and biology.
The Office of Science is equally committed to support of research
in many areas of the physical sciences. In the area of fusion energy
research, for example, we expect to begin fabrication of components for
the ITER project in FY 2006, which we hope will be the penultimate step
to clean, economical and abundant fusion energy. Princeton Plasma
Physics Lab will manage the U.S. contribution to ITER as well as
continuing research on alternative concepts for fusion energy and on
fusion theory.
The Office of Science supports the fundamental science that
provides the foundation for our nation's technological progress and
economic competitiveness. Hence, we must always carefully balance the
allocation of resources, especially in times of fiscal restraint. The
Office of Science is responsible for long-term, high-risk, high-payoff
facilities and programs aligned with DOE missions that maintain U.S.
scientific leadership. We support the research of approximately 23,500
graduate students, post docs, and faculty. Our facilities are used by
more than 19,000 researchers each year. We are the primary source of
support for physical science research in the U.S., providing 42% of
federal funding. Our FY 2006 budget request, we are confident, will
continue U.S. leadership in scientific user facilities in a broad range
of fields of scientific endeavor, including the physical sciences.
YUCCA MOUNTAIN TRANSPORTATION
Question 3. Secretary Bodman, although I have expressed
reservations about the particular Yucca Mountain site, I do agree with
you that the government must responsibly move forward on a national
repository for spent nuclear fuel. Leaving the spent fuel at existing
generator sites is simply not a sustainable solution.
As you may know, I have been concerned with improving the security
of our nation's railroad infrastructure. Transporting this waste from
on-site spent fuel pools at Oyster Creek, Salem and Indian Point will
likely require the radioactive material to travel on rail lines through
11 of New Jersey's counties, and through the heart of two of its
cities--Camden and Trenton. I am also pleased to learn that the
Department's 16 percent increase in Yucca Mountain funding includes a
renewed focus on nuclear waste transportation projects.
In addition to the new rail cars and the Nevada rail line, will the
Department be carrying out infrastructure improvements or inspections
on existing rail lines that would be responsible for the transportation
of nuclear waste? Do you believe that the rail lines on which this
nuclear waste will travel merit extra scrutiny or inspections? If so,
what should the Department of Energy's role be in ensuring the security
of the nation's nuclear waste transportation infrastructure?
Answer. Ensuring the safe and secure transportation of spent
nuclear fuel from utility sites to the Yucca Mountain repository is one
of the highest priorities of the Department's current activities. While
we are focusing our efforts on the development of the Nevada Rail line
and the acquisition of rail cars and transportation casks, we are also
working closely with other Federal agencies to ensure that the national
rail infrastructure will provide for the safe and secure transportation
of these materials. Under current law, the Federal Railroad
Administration is responsible for the safety and security of the rail
infrastructure, rail equipment, rail operations and personnel. It is my
understanding that the Federal Railroad Administration will continue to
develop and enforce the requirements for rail line inspections,
security personnel qualifications and training, and equipment design
and inspection that will ensure the safe transport of spent nuclear
fuel as well as the nearly two million railway tank car shipments of
hazardous substances that occur each year.
Responses of Secretary Bodman to Questions From Senator Salazar
ECONOMIC MODELS FOR RENEWABLE ENERGY
Question 1a. Mr. Secretary, as I mentioned in my opening statement,
I am very concerned about the economic models used by DOE to determine
the costs and benefits of renewable energy and increased energy
efficiency. Your estimates are based on numbers that do not hold up to
inspection. For example, your model has oil prices at about $35 per
barrel for the year 2005, even though actual prices are more than $50
per barrel. The projected costs of renewable energy would compare much
more favorably than current estimates allow if a credible model for oil
and natural gas prices were used in the baseline assumptions.
Could you please explain the discrepancy between the inputs to your
economic models and actual prices for oil and gas?
Answer. All energy markets are subject to considerable uncertainty
and short-term, random perturbations that are difficult to predict. In
recognition of this fact, the Energy Information Administration (EIA)
publishes alternative projection scenarios to provide insight into a
wider range of external market conditions, such as the uncertainties of
world oil markets, than can be accounted for in the reference case
projections. Alternative scenarios are also published that center
around natural gas and renewable energy resource and technology cost
uncertainties.
The High B Oil Price scenario included in the Annual Energy Outlook
2005 (AEO2005), for example, projects sustained oil prices at levels
substantially higher than could be expected based on historical trends.
Such cases indicate that, while high oil prices do tend to increase the
use of cellulosic ethanol as an additive to gasoline (although this
remains a relatively small contributor to automotive fuel supply), they
have little impact on the bulk of renewable energy markets in the
electric power sector, where oil is a minor fuel. In the Restricted
Natural Gas Supply scenario included in the AEO2005, natural gas prices
by 2025 are 30 percent higher than the reference case. Such conditions
do result in somewhat more renewable electric generation, but other
technologies, such as coal or even more efficient gas utilization, are
also able to compensate for the higher prices, and can generally do so
more cost-effectively than renewable resources.
The oil price used in the National Energy Modeling System (NEMS)
and reported in the AEO is the annual average U.S. refiner acquisition
cost of imported crude (IRAC) oil, not the West Texas Intermediate
(WTI) futures market benchmark price. The IRAC price is typically $5
per barrel less than the WTI price that is frequently cited in the
press as the current oil price. Recently, the spread between IRAC and
WTI has exceeded $8 per barrel. Due to data preparation, model
simulations, and analysis that are prerequisites to publishing the AEO,
data inputs and other exogenous assumptions are finalized in September.
The price published in the September Short Term Energy Outlook (STEO)
is the basis for the 2005 oil price used in the AEO reference case.
Because of the volatility in crude oil prices during Fall 2004, EIA
also developed two alternative world oil price scenarios, with a 2005
oil price of $43.63 per barrel, which is much closer to recent WTI
prices, when combined with the $5 per barrel IRAC-to-WTI differential.
As for natural gas, the 2005 price used in the NEMS model is the
average wellhead price as reported in the September STEO. The gas price
typically cited in the press is the Henry Hub price, which on average
is 50 to 60 cents per million Btu (MMBtu) above the average wellhead
price. Under the two higher alternative world oil price scenarios,
natural gas prices in 2005 are higher by another 25 cents per MMBtu,
and thus, when combined, the resulting natural gas price is much closer
to recently quoted prices appearing in the media.
Question 1b. Along these same lines, I am also wondering about your
price forecast for wind energy over the next 15 to 20 years. My
understanding is that the Department of Energy does not account for
reductions in wind energy prices over time. Why not? Do you agree that
with greater demand for capital equipment, wind energy prices should
improve over time?
Answer. Wind energy cost projections prepared by the EIA do account
for reductions in wind energy costs as a direct function of growth in
installed capacity. Consistent with observed market trends of the past
5 to 10 years, reductions in the capital cost of wind power plants are
assumed to be consistent with capital cost reductions in other mature
electric power technologies, and decline at a rate of 1 percent for
every doubling of installed capacity. Reduction in the overall cost of
energy from wind power plants is mostly achieved in the EIA forecast,
as it has been in recent market trends, through significant improvement
in plant performance as measured by the annual capacity factor for new
installations. Because wind energy is a highly capital-intensive
technology, prevailing interest rates (which are not specifically
correlated with wind capacity growth, but tend to increase over the
projection period) also have a significant influence in the overall
cost of energy, and may tend to mitigate forecast declines in the
technology cost of wind. Because of the inherent uncertainties in such
projections, EIA publishes an alternative scenario that assumes
renewable energy technology costs decline an additional 10 percent from
reference case projections by 2025.
Although, as noted, wind technology costs do improve as a function
of increased installations (``learning-by-doing'' or experience curve
effects), the cost of exploiting the wind resource can reasonably be
expected to increase as the best sites are utilized, leaving
increasingly less desirable locations available for new development (a
``supply curve'' effect). There are a number of factors specifically
modeled by EIA to account for depletion of prime, low-cost wind
resource areas, including: prevailing local wind speed, distance from
existing local transmission lines, adequacy of the long-distance
transmission grid, remoteness from infrastructure (such as heavy
construction equipment, skilled workers, major roads, and properly
rated bridges and underpasses), locally rough or difficult terrain, and
decreasing contribution to reliable grid operations. Also, increases in
demand for any capital good that occur in a very short time span can
cause supply-chain bottlenecks and result in temporarily inflated
installation costs. These ``short-term supply elasticity'' effects have
been reported within the wind industry as they periodically respond to
the expiration of key Federal subsidies, and are also accounted for in
EIA modeling of wind and other electric power technologies.
Question 1c. I would like you to have the EIA recalculate the
projected costs for a 10 percent and a 20 percent renewable portfolio
standard using a realistic model--one that incorporates an oil price
floor of $40 per barrel in today's dollars. I would also like to see
these calculations take into account a reasonable improvement in wind
prices over time. I imagine this analysis will take little more than
reprogramming the projected costs of oil and wind power and rerunning
the calculation. Mr. Secretary, will you provide me with the results of
that analysis in the near future?
Answer. As noted above, EIA did publish an alternative scenario in
the Annual Energy Outlook 2005 which assumed historically unprecedented
long-term sustained oil prices measured in terms of the average U.S.
refiner acquisition cost of imported crude (IRAC) of near $40 per
barrel in today's dollars, but oil prices were not found to be an
important factor in renewable penetration. Also, as noted above, wind
cost declines used in the AEO2005 are based on a strong body of U.S.
and international market data from the past 10 years, during which time
period about three quarters of the total U.S. installed wind capacity
has been brought online.
The AEO2005 does include two sensitivity cases that evaluate the
impact of key factors affecting the contribution from new wind plants.
In the High Renewables case, renewable energy technology costs are
assumed to decrease to a level 10 percent lower than achieved in the
reference case by 2025. For wind, this results from both modest capital
cost declines as well as significant additional performance
improvement. Although this cost reduction results in a 25 percent
increase in installed wind capacity by 2025 relative to the reference
case, wind remains a minor contributor to overall electricity supplies
in the U.S.
In the Production Tax Credit (PTC) extension case, the PTC for wind
and other renewable electricity resources is assumed to be extended for
an additional 10 years beyond the current December 31, 2005,
expiration. In this case, plants entering service through 2015 are
eligible to receive the 1.8 cent per kilowatt-hour, inflation-adjusted
credit for the first 10 years of plant operation. As a result, total
installed wind capacity grows to 63 gigawatts by 2015. Although wind
capacity does not grow between 2015 and 2025, by 2025, wind capacity is
over five times greater than in the reference case and represents 3.7
percent of total generation. While significant wind technology cost
declines (basic installation cost reductions and performance
improvements) do occur during the exceptional PTC-induced growth in the
wind industry, these are generally out-paced by increases in wind
resource costs as the lowest-cost resources are already exploited. This
higher-cost wind must also now compete against lower cost alternatives,
as the PTC-induced wind has already displaced some more expensive
generation alternatives and suppressed some of the growth in the price
of natural gas, a key electric generation fuel.
Question 2. Regarding renewable energy research, in the president's
2006 budget, funding for biomass research and development has been cut
by more than 18% ($16.8 million). I believe this is a poor choice.
Biomass offers significant potential as a future energy supply, both as
a source of alternative fuels and as a source of electric power
generation. America's goal of energy independence can not be achieved
without investment in these technologies. For example, affordable
cellulosic ethanol might be achieved in the next few years with proper
research investment. This in turn would lead to a more robust economy,
less dependence of foreign oil, and significant reductions in
greenhouse gases.
Given all of these achievable benefits, why has the biomass program
been cut so significantly? Are the technical challenges to reducing the
costs of cellulosic ethanol still a priority for DOE?
Answer. We are seeking a healthy biomass R&D budget of $72.2
million. While this is down from last year's appropriation of $88.1
million, we believe this as an appropriate level of funding to achieve
our performance targets, and in fact represents a significant increase
when Congressionally-directed projects are excluded from the FY 2005
enacted level.
The Department maintains a robust program to overcome technical
challenges and lower the cost of cellulosic ethanol. If we can bring
down the cost of ethanol derived from materials such as agricultural
and other waste products, the amount of ethanol we could produce
nationally could increase dramatically.
OIL AND GAS RESEARCH AND DEVELOPMENT
Question 3. The President's budget request eliminates all research
and development (R&D) activities related to oil and gas exploration and
production. DOE's oil and gas programs were funded by Congress in the
current fiscal year at a combined total of $78.7 million. Under the
President's proposed budget for DOE, these programs will only receive
$20 million for program close-out. The termination of all technology
support for the domestic oil and gas industry is a mistake. The prime
beneficiaries of that R&D would have been independent domestic
petroleum producers. These producers make up the majority of the
industry operating onshore in the United States, producers who are too
small to afford to conduct the kind of R&D that would help them to
increase the productivity of their oil and gas operations. They rely
heavily on the DOE program and on organizations such as the Petroleum
Technology Transfer Council, that are supported by DOE. How does
closing out such a program square with fostering American energy
independence?
Answer. The President's National Energy Policy (NEP) lays out a
number of suggestions that will help to ensure that economic
investments in needed resource development occur in a timely manner
leading to an improvement in the world's access to oil and gas
resources. Some of these are in the Energy Bill, whose passage is a
high priority of the Administration. Others are administrative actions
that are being pursued by the Department of the Interior, the U.S.
Forest Service, and other agencies.
Budget discipline necessitated close scrutiny of all Fossil Energy
programs, using strict guidelines to determine their effectiveness and
compare them to other programs offering more clearly demonstrated and
substantial benefits. As a result, the 2006 Budget proposes to conduct
orderly termination of the program. It was determined that the industry
has the capacity to pursue this research, especially in light of the
current strong economic performance of the industry. The Energy
Information Administration (EIA) reports that the 28 U.S. major energy
companies spent $370 million on oil and gas recovery research and
development in 2003, the latest available data. This represents a 39%
decline in five years (1998 spending was $606 million). An analysis of
industry R&D spending (1997-2000), reported by the Interstate Oil and
Gas Compact Commission, showed that the oil and gas service industry
spent $631 million per year on technology. An analysis of EIA's 2000
data found that about 24% of research expenditures were for basic and
applied research; the remaining funds product development and technical
services.