[Senate Hearing 115-318]
[From the U.S. Government Publishing Office]
S. Hrg. 115-318
PENDING LEGISLATION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY
OF THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
on
S. 186 S. 1799
S. 1059 S. 1860
S. 1337 H.R. 1109
S. 1457
__________
OCTOBER 3, 2017
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
27-432 WASHINGTON : 2018
COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming MARIA CANTWELL, Washington
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah BERNARD SANDERS, Vermont
JEFF FLAKE, Arizona DEBBIE STABENOW, Michigan
STEVE DAINES, Montana AL FRANKEN, Minnesota
CORY GARDNER, Colorado JOE MANCHIN III, West Virginia
LAMAR ALEXANDER, Tennessee MARTIN HEINRICH, New Mexico
JOHN HOEVEN, North Dakota MAZIE K. HIRONO, Hawaii
BILL CASSIDY, Louisiana ANGUS S. KING, JR., Maine
ROB PORTMAN, Ohio TAMMY DUCKWORTH, Illinois
LUTHER STRANGE, Alabama CATHERINE CORTEZ MASTO, Nevada
------
Subcommittee on Energy
CORY GARDNER, Chairman
JAMES E. RISCH JOE MANCHIN III
JEFF FLAKE RON WYDEN
STEVE DAINES BERNARD SANDERS
LAMAR ALEXANDER AL FRANKEN
JOHN HOEVEN MARTIN HEINRICH
BILL CASSIDY ANGUS S. KING, JR.
ROB PORTMAN TAMMY DUCKWORTH
LUTHER STRANGE CATHERINE CORTEZ MASTO
Colin Hayes, Staff Director
Patrick J. McCormick III, Chief Counsel
Brianne Miller, Senior Professional Staff Member and Energy Policy
Advisor
Angela Becker-Dippmann, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Scott McKee, Democratic Professional Staff Member
C O N T E N T S
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OPENING STATEMENTS
Page
Gardner, Hon. Cory, Subcommittee Chairman and a U.S. Senator from
Colorado....................................................... 1
Manchin III, Hon. Joe, Subcommittee Ranking Member and a U.S.
Senator from West Virginia..................................... 2
WITNESSES
Danly, James, General Counsel, Federal Energy Regulatory
Commission..................................................... 7
McNamee, Bernard, Deputy General Counsel, U.S. Department of
Energy......................................................... 15
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
American Chemistry Council:
Statement for the Record..................................... 3
Danly, James:
Opening Statement............................................ 7
Written Testimony............................................ 9
Responses to Questions for the Record........................ 29
Edison Electric Institute:
Letter for the Record........................................ 33
Gardner, Hon. Cory:
Opening Statement............................................ 1
Inhofe, Hon. James M.:
Statement for the Record..................................... 35
Manchin III, Hon. Joe:
Opening Statement............................................ 2
Markey, Hon. Edward J.:
Statement for the Record..................................... 36
McNamee, Bernard:
Opening Statement............................................ 15
Written Testimony............................................ 17
Northeast Public Power Association:
Letter for the Record........................................ 38
Oklahoma Utilities:
Letter for the Record........................................ 39
__________
The text for each of the bills which were addressed in this hearing can
be found on the Committee's website at: https://www.energy.senate.gov/
public/index.cfm/hearings-and-business-meetings?ID=4E54A5F4-134D-4D11-
B6DC-41D3A59AFA06
PENDING LEGISLATION
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TUESDAY, OCTOBER 3, 2017
U.S. Senate,
Subcommittee on Energy,
Committee on Energy and Natural Resources,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:31 p.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Cory Gardner,
Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. CORY GARDNER,
U.S. SENATOR FROM COLORADO
Senator Gardner [presiding]. The Subcommittee will come to
order.
Good afternoon, everyone. Thank you for being here.
The Subcommittee comes together today for a legislative
hearing on a variety of legislation. As always, I appreciate
the opportunity to work with the Subcommittee's Ranking Member,
Senator Manchin, to address key topics in the energy space.
This legislative hearing will allow us the opportunity to
receive testimony from and ask questions of key personnel from
the two agencies that would be responsible for implementing the
changes laid out in the various pieces of legislation before us
today.
My bill, the Responsible Disposal Reauthorization Act,
would extend the life of a uranium mill tailings disposal site
in Western Colorado through 2048. This disposal site, itself,
is a former uranium and vanadium mill that produced roughly 2.2
million tons of tailings during its 20-year operation. Those
mill tailings were made available for use in the 1950s and
1960s as fill material and sometimes mixed with concrete and
mortar.
We continue to find and remediate sites with these tailings
mixed in them, and we need a safe and secure place to store
them which is what the Grand Junction Disposal Site provides.
The site is a valuable asset to the Department of Energy (DOE)
which should continue to be used until it is full.
I am proud to be an original co-sponsor of Senator
Heinrich's Energy Technology Maturation Act, a bill that would
further the Department of Energy's ability to commercialize the
technology that results from their R&D programs. Without an
emphasis on this commercialization, we risk leaving too many
great ideas on the shelves of our national labs. DOE needs a
variety of tools at their disposal to get these worthwhile
technologies to market, and this bill adds a few more of those
to the toolbox.
The Ranking Member's bill, Capitalizing on American Storage
Potential, looks to expand the eligibility of regional energy
storage projects for the loan guarantee program.
We will also be discussing Senate bill 186, the Fair
Ratepayer Accountability Transparency and Efficiency Standards
Act; S. 1457, the Advanced Nuclear Technologies Act; S. 1860,
the Parity Across Reviews Act; and H.R. 1109, to amend Section
203 of the Federal Power Act, a bill very similar to S. 1860.
I would like to welcome our two witnesses today, Mr. James
Danly and Mr. Bernard McNamee.
I will first turn to Senator Manchin, for his opening
comments.
STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
Senator Manchin. Thank you, Chairman Gardner, and I want to
thank you for holding this hearing and thank you all for being
here today.
I would like to also thank our witnesses from the
Department of Energy and FERC. It is very important to have you
both here before us.
The proposals before Congress, before the Committee, cover
a range of energy and electrical issues but I want to highlight
two, in particular, which Chairman Gardner has just briefly
gone over.
Senate bill 1799, the Energy Technology Maturation Act, led
by Senators Heinrich and Chairman Gardner, will help the
national laboratories work with the private sector to
commercialize innovative energy technology. I was happy to co-
sponsor this bill and look forward to ensuring it helps the
National Energy Technology Laboratory, we know it as NETL, in
Morgantown, West Virginia, as it works to bring the technology,
the development around coal, rare earth elements and natural
gas to market.
I would also like to briefly discuss my bill which is
Senate bill 1337, the Capitalizing American Storage Potential
Act which I introduced with my friend, Senator Capito, also
from West Virginia. I ask consent that this statement from the
American Chemistry Council, in support of Senate bill 1337, be
submitted to the record.
Senator Gardner. Without objection.
[The information referred to follows:]
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Senator Manchin. West Virginia and the greater Appalachian
region has an extraordinary opportunity in its hands. The quad
states of West Virginia, Ohio, Pennsylvania and Kentucky
possess certain attributes that make the region a prime
location for an energy storage hub. The region's shale
formations, the Marcellus and Utica, contain abundant wet
natural gas and natural gas liquids (NGL) like ethane, butane
and propane.
In order to access the vast resources of natural gas in
Appalachia, we must also remove and separate out the NGLs.
NGLs, like ethane, are the building blocks of thousands of
other consumer products that you and I use every day, including
clothing and footwear, electronics, food packaging and
aerospace equipment.
I would also note that as cars become more fuel efficient
they must become lighter which means the increased use of
plastics out of manufacturing and the increased portions of
NGLs. The environmental benefits are notable.
A reliable supply of these products is a critical piece of
the consumer product's supply chain and, therefore, our
national economy.
Coupled with expanding energy infrastructure in the region,
geologic storage, which is naturally occurring, a storage hub
for NGLs will play a role in attracting much needed
manufacturing investment and associated economic activity. The
development and construction of a hub to store these high-value
products in underground geological formations could ultimately
lead to a petrochemical manufacturing hub and a revitalization
of the area's manufacturing center.
In fact, a report released earlier this year by the
American Chemistry Council estimated that the development of a
storage hub would drive up to $36 billion in new investment,
68,706 direct and indirect jobs and about $2.9 billion in
annual tax revenues. West Virginia is a state that is rich in
natural resources, and I believe the Appalachian storage hub
offers an excellent chance for geographic diversification of
our manufacturing sector.
Additionally, the hub will help insulate our nation from
supply disruptions due to ongoing extreme weather events in the
Gulf, and I don't think we have to elaborate on that. It is
just horrible.
Senate bill 1337 highlights the importance of federal
support and partnerships to innovative projects like this one.
This bill reflects the role that the government can play in
revitalizing the Appalachian region by further clarifying the
scope of eligibility for the Title 17 loan program.
Mr. Chairman, you know as well as I do, the importance of
R&D funding, particularly funding that partners the public and
private sectors.
While I recognize the fiscal challenges we face, I believe
that it is important, very important, that we work hard to
ensure that effective programs are sustained.
I look forward to discussing this bill today because a
storage hub is an efficient utilization of our natural energy
resources and will lead to economic development and greater
energy security.
I have been working diligently with the stakeholders
involved, as well as with Secretary Perry, who visited West
Virginia this summer to learn more about this opportunity and
continues to work with us on it right now.
I look forward to working in a bipartisan way to find
opportunities for this Committee to support that effort, and I
want to thank the Chairman for being so kind and working with
me.
Mr. Chairman.
Senator Gardner. Thank you, Senator Manchin.
Mr. Danly is our first witness. He is the General Counsel
for the Federal Energy Regulatory Commission. We will begin
with your testimony.
STATEMENT OF JAMES DANLY, GENERAL COUNSEL,
FEDERAL ENERGY REGULATORY COMMISSION
Mr. Danly. Chairman Gardner, Ranking Member Manchin, I very
much appreciate the opportunity to come today to testify.
My name is James Danly, and I am the General Counsel of the
Federal Energy Regulatory Commission. Before I begin, I just
want to mention that I'm coming here as a staff witness and the
views that I present today are not those of the Commission as a
body or those of any individual commissioner.
I've been asked to appear in order to testify on three
bills today. The first two would modify Section 203 of the
Federal Power Act, and the third would modify Section 205 of
the Federal Power Act.
The first two bills, as I said, modify Section 203. Section
203 of the Federal Power Act subjects to the Commission's
approval a number of different types of financial transactions
among jurisdictional entities. These bills together seek to
amend Section 203 in order to establish a $10 million cap for
the ``merge or consolidate'' subsection of Section 2013. Right
now, there is no such limit. The value of these bills is that
they would both bring that ``merge or consolidate'' subsection
into conformity with the remaining subsections of Section 203
and they would help relieve an administrative burden on the
agency and relieve regulatory burden on the jurisdictional
entities that are seeking to conduct these relatively small
transactions. In my view, exempting the transactions that are
below this reasonable $10 million threshold does not present
any problem for market power or rate prices going forward.
The third bill, which modifies Section 205, is another
matter. Ordinarily, when a public utility seeks to amend its
tariff it has to make a filing under Section 205 with a 60-day
time limit. In the almost invariable course of the Commission's
activity the Commission takes action, one way or another,
within that 60 days on that filing to amend the tariff. In
exceptionally rare circumstances the Commission does not act
within those 60 days and the tariff filings, the tariff changes
go into effect by operation of law.
This bill seeks to alter Section 205 so as to allow for
parties agreed in the 205 proceeding to seek rehearing should
they not like the outcome of the rates going into effect by
operation of law.
As the Subcommittee considers whether or not to adopt this
legislation, I would urge it to keep in mind several points.
The first one is that even as Section 205 is currently
constituted there is still redress available for aggrieved
parties under Section 206. Second, the legislation may not
produce the intended relief that, I believe, the Subcommittee
is looking for. It may not provide, as a practical matter, the
relief that, I think, the bill might be thought to. And I can
get into details with that, if you're interested, in questions.
And lastly, I think that the language of the bill might be a
little bit overbroad to accomplish that narrow goal.
So, with that, I just want to thank you for the chance to
speak about these bills, and I look forward to any questions
you might have.
[The prepared statement of Mr. Danly follows:]
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Senator Gardner. Thank you, Mr. Danly.
Mr. McNamee, the Deputy General Counsel for Energy Policy
at the Department of Energy, thank you for joining us.
STATEMENT OF BERNARD McNAMEE, DEPUTY GENERAL COUNSEL, U.S.
DEPARTMENT OF ENERGY
Mr. McNamee. Thank you, Senator.
Chairman Gardner, Ranking Member Manchin and members of the
Subcommittee, I am the Deputy General Counsel for Energy Policy
at the Department of Energy and it's a privilege and honor to
represent the Department here today. I just want to thank you
for the opportunity to testify before you on behalf of the
Department.
The Department of Energy is an agency tasked with a number
of important responsibilities, many of them you already know,
but among them are assuring the nuclear readiness, overseeing
the nation's energy supply, carrying out the environmental
cleanup from the nuclear mission and managing the Department's
17 national labs.
In support of the Administration's goals of establishing
energy dominance and economic competitiveness, the Department's
energy and science programs are focused on research and
development across the variety of technologies and variety of
fuel sources.
By carefully setting priorities and focusing on the most
promising research, the Department and its national
laboratories will continue to support the world's best
enterprise of scientists and engineers. These are the great men
and women who create the innovations that help drive American
prosperity, security and competitiveness for the next
generation.
I've been asked to testify on multiple bills today which
the Administration continues to review. They are: Senate bill
1059, the Responsible Disposal Reauthorization Act; Senate bill
1337, the Capitalization on America's Storage Potential Act;
Senate bill 1457, the Advanced Nuclear Energy Technologies Act;
and Senate bill 1799, the Energy Technology Maturation Act. I
look forward to discussing these bills in further detail and
answering your questions.
The Department also appreciates the ongoing bipartisan
efforts to address our nation's energy challenges and looks
forward to working with the Subcommittee and the entire
Committee on legislation on today's agenda and into the future.
Our nation will achieve our economic, energy and
environmental goals by ensuring that the United States
continues to be a leader in energy technology, development and
delivery and by unleashing America's ingenuity to unlock our
natural resources.
Through research and development, collaboration at all
levels of government and the private sector, the Department of
Energy and our national labs aim to support America's energy
renaissance.
The Administration looks forward to continuing to work with
Congress on the legislation to enhance U.S. competitiveness and
job creation as a whole.
I would ask that my written testimony be entered into the
record. I thank you for the opportunity to be here and look
forward to your questions.
Thank you.
[The prepared statement of Mr. McNamee follows:]
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Senator Gardner. Thank you.
Your written testimony will be entered into the record.
Thank you for that.
Thank you both for being here today.
Senator Heinrich, Senator Manchin and I have already
bragged about your legislation in our opening comments. Did you
want to make a few opening comments here? We will get to you in
questions in a little bit, but do you want to make an opening
statement?
Senator Heinrich. I will keep it short and just say, I sure
appreciate you holding this hearing and we are excited to get
this legislation moving. Thank you for participating and being
a co-sponsor, both you and the Ranking Member.
Thank you very much.
Senator Gardner. We will start with our questions.
Mr. McNamee, in your testimony you talked about the Grand
Junction disposal site, that it is the only active site managed
by the Department of Energy's Office of Legacy Management and
that it collects low-level radioactive waste, primarily from
the local area.
Could you talk about the assessment that went behind the
support of finding the cost effectiveness of extending the
facility authorization for another 25 years is appropriate? Is
it appropriate, in your judgment, to extend the facility use
period?
Mr. McNamee. The Department has not taken a specific
position on the bill for the actual disposal site itself. As
you're aware, there's about--there's sufficient space in order
to keep that site available and taking what has been on
average, about 2,700 cubic yards of material a year and it
could be extended for up to 85 years. So your legislation is
within that time period.
Senator Gardner. Great.
I understand that it has about 250,000 cubic yards of
additional material that the site could accommodate, so thank
you.
Mr. McNamee. That's correct.
Senator Gardner. I want to turn to the Heinrich/Manchin/
Gardner legislation. The bill under discussion would expand the
authorization for the Department of Energy and its national
labs to focus on the commercialization of innovative
technologies, as we have discussed.
Could you talk a little bit more about the effectiveness of
the existing Technology Commercialization Fund program at DOE
and what we have seen from that existing fund?
Mr. McNamee. The existing fund has available to it, under
the way that Congress has structured funding, about $20 million
a year in order to provide funding. And it is focused currently
on providing a way to bring the technologies that's being
developed by the labs and the other national entities under DOE
in order to help not only create the innovation but also giving
an opportunity for the private sector. And that has been under
this Administration, particularly Secretary Perry, trying to
make sure that there's more access.
This bill enhances that approach making sure that,
especially, small businesses would have access to that
technology and have an ability to tap into certain funds in
order to bring that to market.
Senator Gardner. Is that one of the biggest challenges the
current fund has, that inability or perhaps not quite as robust
ability to have the participation from the private sector
partnerships that you have just described?
Mr. McNamee. I don't have the specific information about
the challenges they've had, in that sense, but clearly, being
able to make sure that small businesses have access to the
great technology and insights that the labs have is an
important thing. And so, therefore, this legislation is
consistent with that.
Senator Gardner. Thank you.
Senator Manchin.
Senator Manchin. Thank you, Mr. Chairman.
Mr. McNamee, on the proposed Appalachian storage hub, it is
a regional hub providing storage for natural gas liquids. I
think you are familiar with what we are trying to accomplish.
It is in a quad state--West Virginia, Pennsylvania, Ohio and
Kentucky.
I have been encouraged by Secretary Perry's interest in the
project. He came to West Virginia and we went over the entire
project, the opportunities we might have. And the storage hub
promotes the efficient utilization of the natural resources,
energy resources, we have.
So I would like to give you a chance today to provide the
Committee with a DOE perspective on that hub, if you all had a
chance to go in depth on it? And for the security of our
nation? And the other part of my question is going to be--it
has been a very busy hurricane season, as we have seen, and
every time we hear of a hurricane even coming close to the
coast in the Southwest, we know gasoline prices, shortages--
there will be every excuse in the world and every reason in the
world to start changing the flow of energy. This would
stabilize, I believe, the entire country. Your insight on that
would be very much appreciated.
Mr. McNamee. Thank you, Senator Manchin.
You're correct that the idea of this energy hub has created
great interest. As you mentioned, Secretary Perry, I believe in
July, attended a conference dealing with this in Morgantown,
West Virginia.
Senator Manchin. Right.
Mr. McNamee. And clearly the energy renaissance that has
taken place in this country has been phenomenal in terms of not
only in its gas production, but its natural gas production and
especially in the Utica and Marcellus shale production.
What's happened in this area of the country, especially
where your legislation and where the discussion about the
energy hub would be, would be in the center of one of the major
centers for that and also expand from it, centers that are
usually perceived for this sort of activity in the Southwest
United States.
The----
Senator Manchin. Did you all consider the protection as far
as the natural geographical location and protection from the
severe weather storms that we are having?
Mr. McNamee. Yes, sir.
It clearly, that even being in this central location of the
country away from the hurricane centers, makes a large
difference. It also makes a difference that the resource is
there and so there's not as much transportation cost.
Senator Manchin. Right.
Mr. McNamee. You know, through the pipelines or otherwise
and that will also provide--I believe as I've understood it,
that the theory behind this hub is also that it will attract
other businesses to the area in order to create an economic
engine to provide new jobs to a region that's been so hard hit.
Senator Manchin. Right.
Mr. McNamee. You know, because of the challenges on
environmental issues and coal issues.
Senator Manchin. Yes. It would be a win/win for all of us.
Mr. Danly, if I may. Last week, as a follow-up to a report
that was released in August, Secretary Perry sent a proposal to
FERC directing FERC to write a rule which will enhance
reliability and resilience of our electric grid by more
appropriate valuing of the central reliability services that
many plans and financial straits offer but are not compensated
for. Do you know?
It is especially timely because we have seen several recent
natural disasters putting the grid in danger. I know how close
we came in January 2014 during the Polar Vortex--the frigid
temperatures resulted in a record of 141,132 megawatts called
up on in PJM to meet the demand. We came close to lights out
and we have had them testify before us before, all the
different carriers, and PJM especially.
Following the winter of 2014, AEP reported that nearly 90
percent of its coal plants that were scheduled for retirement
ran during the vortex. That means without that, the lights
would have gone off.
So we keep talking about the reliability that we have to
have in the grid system. I am curious what FERC intends to do
following the order and what are the Commission's next steps?
Mr. Danly. Thank you, Senator.
You're right. Last week under Section 403 the Secretary
exercised his privilege to initiate a rulemaking. Today, the
Commission issued a notice, a schedule notice, that invited
comments and reply comments. Right now the Commission is
internally reviewing the Notice of Proposed Rulemaking (NOPR)
that was put forward by the Secretary. We're reviewing the
options that are available and we are in the process of
building the record by soliciting these comments and reply
comments. Once they're assembled we're going to review them and
take the appropriate action within the 60-day timeframe
established by the NOPR.
Senator Manchin. I know FERC is very much aware of the
baseload plants and basically I think we have baseload today,
and the definition of baseload means uninterruptible power,
that is going to be coal and nukes.
Natural gas plants are coming on strong replacing a lot of
the baseload plants. Natural gas is considered a baseload today
in our grid delivery, in the delivery system to the grid, but
it is still interruptible and it can still have some concerns
with that.
I do not know how you all are weighing that on potential
disasters we may have or with blackouts or terrorist attacks or
cyberattacks and things of that sort?
Mr. Danly. It would be premature at this point, with the
Notice of Proposed Rulemaking only having come out on Friday
and us noticing the request for comments to assemble the record
at this point, for me to even imagine what the method of
approach in the subject is going to be. Rest assured the
Commission is diligently working and reviewing the rulemaking
proposal, and it is attempting to assemble as many comments as
it can.
Senator Manchin. Thank you.
Thank you, Mr. Chairman.
Senator Gardner. Thank you, Senator Manchin.
Senator Heinrich.
Senator Heinrich. Mr. McNamee, as you know DOE's recent
staff report on power markets actually concluded that the grid
is currently operating reliably. I was surprised by Secretary
Perry's directing FERC to implement cost-based rates in fully
competitive markets for bulk power in what is an apparent
attempt to subsidize both nuclear- and coal-fired generation.
What was the basis for the Secretary to conclude that there
is an urgent need based on reliability given the outcome of
that report and its conclusions?
Mr. McNamee. Thank you, Senator.
As you know, the reasons for issuing the NOPR were stated
by the Secretary, both in his letter and the preamble to the
NOPR.
But to your specific question, the difference was pointed
out both in the letter and in the grid study about the
difference between reliability and resiliency.
And so, as discussed in the NOPR and identifying both from
the grid study, the staff report by DOE, comments by NERC and
others, there is a difference between reliability and
resiliency and that the conclusions in those commentaries, both
the staff report and by NERC, observed and to be honest, FERC
has had a technical conference trying to deal with some of the
resiliency issues, to identify that there are issues about fuel
security being able to be available, not just today, but during
extreme events. That's the driving thrust and the difference
between reliability and resiliency, sir.
Senator Heinrich. Mr. Danly, what has been FERC's approach
to addressing long-term issues of grid reliability and
resiliency? Does FERC pick generation technologies and fuels in
competitive markets or is that a matter best left to state and
local officials?
Mr. Danly. Senator, historically, FERC has not decided what
fuel would be used. Our job is to, or I should say, the
Commission's job is to ensure that when the electricity is
generated we can make certain that the wholesale markets
produce just and reasonable rates.
Senator Heinrich. I think that is a very reasonable
approach. I would just want to warn all of my colleagues, I
think if you want to go down this slope of picking winners and
losers without letting the markets make those decisions, it may
take you places you did not expect to go.
Senator Gardner. Thank you, Senator Heinrich.
We will go another round here. We both have additional
questions.
Mr. Danly, I want to talk a little bit about the Section
205 issue that you brought up and a question of whether it
actually provides the kind of relief that, I think, was
intended by the legislation, whether or not the expansion might
be a little too broad and not get to the relief that they are
looking for.
Regarding Senate bill 186, is it possible that this
legislation could limit the delegation of authority of the FERC
Commissioners to staff in the event of a loss of a quorum?
Mr. Danly. I'm sorry, can you say that again?
Senator Gardner. Is it possible that Senate bill 186 could
limit the delegation authority of the FERC Commissioners to
staff in the event of a loss of a quorum?
Mr. Danly. I have not thought about that subject
specifically, Senator, but I don't see why delegation orders
aren't still possible given this bill, if it's passed.
Senator Gardner. Okay.
I understand that the proposed bill tries to resolve some
infrequent situations of an activity at FERC, but would you
talk a little bit about how the incentives for action or
inaction would be different under the proposed law versus
current law----
Mr. Danly. Um.
Senator Gardner. ----and would we end up with additional
split decisions as a result?
Mr. Danly. Right.
So, the--thank you.
The reason why this may not practically affect the relief
that I think the bill is aiming toward is that should we have a
case of a deadlock and that be the reason for inaction and
therefore, the reason for the rates going into effect by
operation of law, like we did in the ISO New England Forward
Capacity Auction rate case which everybody here presumably
remembers pretty well.
The likelihood of the party, the aggrieved party, seeking
rehearing and then getting an order on rehearing is virtually
zero. If you have a deadlock in the first instance, you're
likely to have a deadlock in the second.
Though it is important that we have procedures for review,
both in the form of rehearing at the Commission and then
judicial review after the fact, the under--courts that sit in
review of agency decisions have to review an order of that
agency that sets out the reasoning that the agency has for the
decision.
Even if we were to afford the possibility of a rehearing
which would not produce an order under these circumstances and
even if it managed to get into a Court of Appeals, which it
likely wouldn't given the precedent from the DC Circuit, the
Court of Appeals would simply remand back to the agency anyway
because there would be no reasoning upon which to base its
review of the action. So I simply believe it to be, probably,
not a promise of relief to the parties who are aggrieved by the
rates that go into effect.
Senator Gardner. Thank you.
Mr. McNamee, nuclear energy made up roughly 20 percent of
the utility scale generation in the U.S. in 2016. It is a no-
carbon-footprint source of energy, a reliable source.
How important is it to the energy security of the United
States that we continue the research and development of nuclear
sector technology?
Mr. McNamee. Thank you, Senator.
You're correct that nuclear is an important part of both
the reliability of the--reliability and resiliency--of the
electric grid, as demonstrated in the staff report.
But I think your question also goes further in discussing
it more broadly and its best we, in regards to the legislation
before you talked about it, advanced nuclear technology, that
we don't take a particular position on this legislation. It is
clear that the Department has been very robust in trying to
develop advanced nuclear reactors and making sure that America
continues to be a leader in nuclear technology.
That is something, you know, whether it be small nuclear
reactors or the various types of water reactors, it's something
that's important that the Department is engaged in every day. I
understand that this legislation's intent is to advance that as
well.
Senator Gardner. Thank you, Mr. McNamee.
Mr. McNamee, again, the 2005 Energy Policy Act amended the
Federal Power Act in an attempt to reduce the 203 review
workload of FERC by streamlining its review structure and
raising the monetary threshold that triggered the reviews which
had not been changed from the $50,000 level it was set at in
1935.
Can you explain how unclear language in 2005, in the Energy
Policy Act (EPAct 2005), actually had the opposite effect of
increasing the workload?
Mr. McNamee. I believe, Senator, that might be more
appropriate for my colleague to answer.
Senator Gardner. Mr. Danly?
Mr. Danly. You're asking about the amendment for 203 to
make the $10 million threshold?
Senator Gardner. Correct.
Mr. Danly. As written before there was a single provision
rather than the split provisions for the different types of
transactions in Section 203, and with EPAct 2005 that was split
into different sections and a $10 million threshold was applied
to each of the sections with the exception of the ``merge or
consolidate'' section which is the one that's at issue here.
When that happened, we had before had a $50,000 threshold
for everything because it was a single provision with that
single value. And now, every one of the different types of
transactions are subject to a threshold of $10 million except
for ``merge or consolidate.''
The effect after the Commission gave its reading of what
the statutory language meant was that there was no minimum
conception whatsoever from ``merge or consolidate'' and this
would be a step in bringing the entirety of 203 back to the
effective regime we had in the previous version which was to
allow a threshold for all of the different types of
transactions subject to Commission approval.
Senator Gardner. Mr. Danly, Mr. McNamee, we have run out of
Senators here, so thank you very much for your time and
testimony today on the legislation before us.
We will keep the record open until tomorrow, close of
business, if any member wishes to submit questions for the
record, and we ask for your timely response should additional
questions be submitted.
Thank you, to both of you, for your time and testimony
today.
With that, the Committee is adjourned.
[Whereupon, at 3:00 p.m. the hearing was adjourned.]
APPENDIX MATERIAL SUBMITTED
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