<DOC> [110th Congress House Hearings] [From the U.S. Government Printing Office via GPO Access] [DOCID: f:35770.wais] NATIONAL INTEREST ELECTRIC TRANSMISSION CORRIDORS ======================================================================= HEARING before the SUBCOMMITTEE ON DOMESTIC POLICY of the COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES ONE HUNDRED TENTH CONGRESS FIRST SESSION __________ APRIL 25, 2007 __________ Serial No. 110-7 __________ Printed for the use of the Committee on Oversight and Government Reform Available via the World Wide Web: http://www.gpoaccess.gov/congress/ index.html http://www.oversight.house.gov U.S. GOVERNMENT PRINTING OFFICE 35-770 PDF WASHINGTON : 2007 --------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202)512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON OVERSISGHT AND GOVERNMENT REFORM HENRY A. WAXMAN, California, Chairman TOM LANTOS, California TOM DAVIS, Virginia EDOLPHUS TOWNS, New York DAN BURTON, Indiana PAUL E. KANJORSKI, Pennsylvania CHRISTOPHER SHAYS, Connecticut CAROLYN B. MALONEY, New York JOHN M. McHUGH, New York ELIJAH E. CUMMINGS, Maryland JOHN L. MICA, Florida DENNIS J. KUCINICH, Ohio MARK E. SOUDER, Indiana DANNY K. DAVIS, Illinois TODD RUSSELL PLATTS, Pennsylvania JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah WM. LACY CLAY, Missouri JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California MICHAEL R. TURNER, Ohio STEPHEN F. LYNCH, Massachusetts DARRELL E. ISSA, California BRIAN HIGGINS, New York KENNY MARCHANT, Texas JOHN A. YARMUTH, Kentucky LYNN A. WESTMORELAND, Georgia BRUCE L. BRALEY, Iowa PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of VIRGINIA FOXX, North Carolina Columbia BRIAN P. BILBRAY, California BETTY McCOLLUM, Minnesota BILL SALI, Idaho JIM COOPER, Tennessee ------ ------ CHRIS VAN HOLLEN, Maryland PAUL W. HODES, New Hampshire CHRISTOPHER S. MURPHY, Connecticut JOHN P. SARBANES, Maryland PETER WELCH, Vermont Phil Schiliro, Chief of Staff Phil Barnett, Staff Director Earley Green, Chief Clerk David Marin, Minority Staff Director Subcommittee on Domestic Policy DENNIS J. KUCINICH, Ohio, Chairman TOM LANTOS, California DARRELL E. ISSA, California ELIJAH E. CUMMINGS, Maryland DAN BURTON, Indiana DIANE E. WATSON, California CHRISTOPHER SHAYS, Connecticut CHRISTOPHER S. MURPHY, Connecticut JOHN L. MICA, Florida DANNY K. DAVIS, Illinois MARK E. SOUDER, Indiana JOHN F. TIERNEY, Massachusetts CHRIS CANNON, Utah BRIAN HIGGINS, New York BRIAN P. BILBRAY, California BRUCE L. BRALEY, Iowa Jaron R. Bourke, Staff Director C O N T E N T S ---------- Page Hearing held on April 25, 2007................................... 1 Statement of: Kolevar, Kevin, Director, Office of Electricity Delivery and Energy Reliability, Department of Energy................... 148 Tonko, Paul D., Chair, Committee on Energy, New York State Assembly; Bill DeWeese, majority leader, Pennsylvania House of Representatives; Kurt Adams, chairman, Maine Public Utilities Commission; Elizabeth Merritt, deputy general counsel, National Trust for Historic Preservation; Paul D. Koonce, chief executive officer, Dominion Resources, Inc.; and Chris Miller, president, Piedmont Environmental Council 50 Adams, Kurt.............................................. 72 DeWeese, Bill............................................ 59 Koonce, Paul D........................................... 88 Merritt, Elizabeth....................................... 77 Miller, Chris............................................ 99 Tonko, Paul D............................................ 50 Letters, statements, etc., submitted for the record by: Adams, Kurt, chairman, Maine Public Utilities Commission, prepared statement of...................................... 74 Arcuri, Hon. Michael A., a Representative in Congress from the State of New York, prepared statement of............... 46 Cummings, Hon. Elijah E., a Representative in Congress from the State of Maryland, prepared statement of............... 162 Davis, Hon. Tom, a Representative in Congress from the State of Virginia, prepared statement of......................... 11 DeWeese, Bill, majority leader, Pennsylvania House of Representatives, prepared statement of..................... 61 Issa, Hon. Darrell E., a Representative in Congress from the State of California, prepared statement of................. 20 Kolevar, Kevin, Director, Office of Electricity Delivery and Energy Reliability, Department of Energy, prepared statement of............................................... 150 Koonce, Paul D., chief executive officer, Dominion Resources, Inc., prepared statement of................................ 90 Kucinich, Hon. Dennis J., a Representative in Congress from the State of Ohio: Prepared statement of........................................ 4 Prepared statement of Mr. Holland............................ 70 Merritt, Elizabeth, deputy general counsel, National Trust for Historic Preservation, prepared statement of........... 80 Miller, Chris, president, Piedmont Environmental Council, prepared statement of...................................... 101 Murphy, Hon. Christopher S., a Representative in Congress from the State of Connecticut, prepared statements of Mr. Murray and Governor Rell................................... 25 Tonko, Paul D., Chair, Committee on Energy, New York State Assembly, prepared statement of............................ 53 Waxman, Hon. Henry A., a Representative in Congress from the State of California, prepared statement of................. 15 Wolf, Hon. Frank R., a Representative in Congress from the State of Virginia, followup questions and responses........ 131 NATIONAL INTEREST ELECTRIC TRANSMISSION CORRIDORS ---------- Wednesday, April 25, 2007 House of Representatives, Subcommittee on Domestic Policy, Committee on Oversight and Government Reform, Washington, DC. The subcommittee met, pursuant to notice, at 2 p.m. in room 2154, Rayburn House Office Building, Hon. Dennis J. Kucinich (chairman of the subcommittee) presiding. Present: Representatives Kucinich, Waxman, Cummings, Tierney, Higgins, Davis of Virginia, and Issa. Also present: Representatives Wolf, Murphy, Hall, Hinchey, and Arcuri. Staff present: Jaron R. Bourke, staff director; Jean Gosa, clerk; Nidia Salazar, staff assistant; Auke Mahar-Piersma, legislative director, Office of Congressman Dennis J. Kucinich; Natalie Laber, press secretary, Office of Congressman Dennis J. Kucinich; Jacy Darding, full committee intern; Kristina Husar, minority professional staff member; Larry Brady, minority senior investigator and policy advisor; Benjamin Chance, minority clerk; Darcie Brickner, minority legislative assistant; and Bill Womack, minority legislative director. Mr. Kucinich. Good afternoon. The Subcommittee on Domestic Policy of the Committee on Oversight and Government Reform will now come to order. Today's hearing will examine the implementation of section 1221 of the Energy Policy Act of 2005, which is the section of law that established new Federal authority for siting new electric transmission lines which, in certain cases, will preempt State and local authorities. Without objection, the Chair and the ranking minority member will have 5 minutes to make opening statements, followed by opening statements not to exceed 3 minutes by any other Member who seeks recognition. So ordered. Without objection, Members and witnesses may have 5 legislative days to submit a written statement or extraneous materials for the record. So ordered. Without objection, we will be joined on the dais by Members not on our committee for the purpose of participating in this hearing and asking questions of our witnesses. So ordered. We welcome the ranking Republican, Mr. Issa. Thank you, Mr. Issa, for being here. Today this subcommittee will examine the Department of Energy's implementation of section 1221 of the Energy Policy Act of 2005 and its implications for public land, private landowners, our Nation's energy infrastructure, and the environment. The Energy Policy Act of 2005 was signed into law by President Bush in October 2005. I opposed the act because it did not provide any vision for a sustainable energy future. Rather, it was a grab bag of government giveaways to the energy industry. It weakened our environmental laws and the laws that provide for public input while doing almost nothing to help wean this Nation off of our dangerous dependence on oil or addressing the major challenge of global climate change. Section 1221 amounted to only a few pages in the 1,700-page energy bill, but it was intensely debated within Congress. A host of organizations opposed the provision, including State Governors, utility commissioners, and environmental groups. Now that section 1221 is being implemented, the American people are on the verge of discovering why its enactment was so controversial. Section 1221 was designed to make it easier for electric companies to construct high-voltage electricity transmission lines over the objection of private property holders and State and local communities. As the law is written, a State may have little or no ability to determine whether a transmission line goes through one of its State parks, a historic battlefield, land protected by conservation easements, or private land. Energy companies may be able to apply for permits directly with the Federal Government, which can grant them imminent domain authority to construct transmission lines through private property. This new Federal authority for siting electric transmission lines is exercised through a three-step process. First, the Department of Energy creates a transmission congestion study. This study is used to determine whether parts of the country are suffering from electric transmission congestion. I should point out that the term congestion, which is used by the Department and the act, does not necessarily mean that an area is facing reliability concerns or that demand will exceed supply within the area. It merely means that additional transmission lines would be used if they were available. Basically, if an energy company says it has plans for new transmission lines, that pretty much satisfies the definition of congestion, and no recourse through alternatives need be made. Second, once the Department of Energy conducts its congestion study section 1221 authorizes, the Department can designate regions of the country that experience congestion as national interest electric transmission corridors. Remarkably, there is no statutory limitation on the size of these corridors, and, as we will hear today, a corridor could contain nearly an entire State. Finally, once the Department of Energy designates a corridor, any proponent of a transmission line can propose a project within one of these corridors. Within these corridors, energy companies have special rights to bypass a State and seek permits for a project directly from the Federal Energy Regulatory Commission [FERC], here in Washington, DC. Once approved by the FERC, the energy company can go to Federal court and force a private land owner to sell a right-of-way through their property for the project. To date the Department of Energy has completed the first step in this process. In August 2006, the Energy Department released a congestion study that found that a number of regions of the country faced electric transmission congestion. These regions included southern California, the Atlantic coastal area from metropolitan New York through northern Virginia, New England, the Phoenix-Tucson area, the Seattle-Portland area, and the San Francisco Bay area. As part of the implementation process, the Department of Energy also asked organizations whether any region of the country should be given early corridor designation. A number of proposals were submitted from energy companies and their organizations. The proposals included requests for corridor designations in California, Delaware, Maryland, Ohio, New Jersey, New York, Virginia, and West Virginia. These requests could lead to a designation of corridors covering large populations of States like Pennsylvania, Maryland, and New Jersey. The Department of Energy has refused at this point to discuss the particular corridor designations that it may be making. However, it has stated that southern California and the Atlantic coastal area are the regions most likely to receive them. Now, with the release of the congestion study and the Department's pending designations, the large number of groups have once again raised a host of concerns about the law, itself, and the Department of Energy's implementation of it. They include: Whether the Department of Energy is taking into account the protection of national parks, State parks, conservation easements, and historical sites like battlefields when determining where an electric transmission corridor should be designated; whether the Department of Energy is considering the effects of a corridor designation on the private property rights of land owners; whether the Department is considering the environmental impact of corridor designations; whether the Department of Energy is considering alternatives to constructing new electric transmission lines like the land side management, distribution generation, and energy efficiency; whether the Department has adequately considered the actual benefit utility consumers would receive from new transmission lines; and, finally, whether the Department has adequately consulted States to determine if corridor designation will adversely impact the energy policies the State has developed. I hope that, starting today, Congress will begin to get some answers. Finally, I would like to thank the ranking member of the full committee, Mr. Davis, for suggesting today's hearing. His State is on the front line of this issue, although many other States are probably not very far behind. I look forward to hearing from each and every witness today and I thank the witnesses for being here. At this time I would recognize for purposes of making an opening statement the ranking member, Mr. Issa. [The prepared statement of Hon. Dennis J. Kucinich follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Issa. And I would yield to the ranking member of the full committee if I could, please. Mr. Kucinich. Mr. Davis, the ranking member of the full committee, is recognized. Again, Mr. Davis, the committee wishes to express to you our appreciation for the work that you have done in setting up this hearing. Mr. Davis of Virginia. Thank you, Chairman Kucinich. Let me thank you for working on a bipartisan basis to hold today's oversight hearing on the implementation of section 1221 of the Energy Policy Act of 2005. We call it EPAct. At its core, this section of the act focuses on the creation of national interest electric transmission corridors in areas of the country where DOE has determined that there is a critical need. Many have raised concerns about this section of the act, and I understand both Mr. Hinchey and Mr. Wolf have introduced legislation to address this problem, and I support their efforts. But ultimately we are here today to exercise our committee's oversight responsibility on the provision that is potentially problematical. Last summer DOE designated two critical congestion areas, which include the Atlantic Coast area from metropolitan New York southward to northern Virginia, and southern California. Based on this finding, DOE is in the process of designing and designating draft national interest electric transmission corridors. The significance of this designation comes from the new authority that the EPAct granted to the Federal Energy Regulatory Commission [FERC]. Utility companies in NIET corridors may apply to FERC, which now has so-called back stop authority to approve new transmission lines if the State process fails for a number of reasons. My concerns over section 1221 of the Energy Policy Act springs from two sources: federalism/State autonomy issues, and, second, the mind set with which we approach energy management challenges. With respect to State autonomy, States have been in charge of the approval process of new transmission lines from the beginning. State statutes are set up to balance the interest of their citizens, who are equally consumers of energy, land owners, and consumers of the environment. For example, in my home State, when the Corporation Commission reviews an appreciate of a new transmission line, they are bound to consider not just need, but also that the new transmission line will minimize adverse impacts on the scenic assets, historic districts, and the environment of the affected area. If a utility applies to FERC, will these issues be given due consideration? With respect to managing the challenges associated with the energy generation distribution, I would first point out that we in Virginia have an agency problem. According to a 2006 DOE report, the mid-Atlantic region of the country requires billions of dollars of investment in new transmission generation and demand side resources over the next decade to protect grid reliability. I want to take a moment to reflect on that statement. According to the U.S. Department of Energy, there are three elements involved in solving grid congestion: transmission lines, new generation, and demand side management. Clearly, there is not a single solution to my State's energy problem. New transmission lines are not a silver bullet. In fact, before they released their national electric transmission congestion study, this here, they released a study on the benefits of demand response and electricity markets and recommendations for achieving them. As the title suggests, this study evaluates the benefits of investing in demand side management. Demand side management refers to the management of consumer demand in response to supply conditions. For example, demand side management solutions work with electricity customers to reduce their consumption at critical times or in response to market prices. Customers would then shed loads in response to a request by utility or market price conditions. Under conditions of tight electricity supply, demand response could significantly reduce the peak price and, in general, electricity price volatility. In fact, the State of California effectively used demand side mechanisms to cope with last summer's heat wave. The bottom line is that sound energy policy is and should continue to be a significant priority of both the States and the Federal Government. Reliable and affordable energy is a key component of economic development; however, opportunities for innovation and conservation cannot and should not be ignored. It is appropriate to require that solutions such as demand side management and conservation be part of the package of alternatives considered when planning for expected energy needs. It is also important that the Federal Government not needlessly usurp the longstanding authority and role of States on this issue. The 2005 Energy Policy Act understood and shared this goal. I hope we can leave here today with a better understanding of the way that the Federal Government can work with States to solve energy congestion problems while respecting State autonomy. I look forward to hearing today's witnesses and I yield back. [The prepared statement of Hon. Tom Davis follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. I thank the gentleman. At this time I would like to recognize Mr. Waxman, who is the chairman of the full committee. Henry Waxman of California has set very high levels for Government accountability, and we are honored to have him chair the full committee. Mr. Waxman. Mr. Waxman. Thank you very much, Mr. Chairman. Thank you for holding today's hearing. Developing sensible energy policies has always required a collaborative approach between the Federal, State, and local governments and the constituents they serve. Since the light bulb's invention, States have been the lead on siting infrastructure like high-voltage transmission lines. State governments are closer to the people impacted by these facilities and know how they want their communities to grow. That is one of the reasons I was very concerned about the Energy Policy Act of 2005. Rather than being respectful of the traditional Federal/State relationship, the Energy Policy Act trampled on it by creating a legal mechanism for energy companies to end run the States and get practically any transmission project, no matter how ill-considered, approved here in Washington, DC. By someone who was deeply involved in that legislation, I would like to take a moment to explain how we got where we are to day. In May 2001, the White House released a national energy policy developed by Vice President Cheney. This plan proposed a new Federal imminent domain authority to provide energy companies with rights of way for proposed electric transmission projects. In October 2001, the Electric Utility Lobby testified in support of the proposal. They testified that, in the preceding 5 years, electric utilities had exercised State- authorized imminent domain more than 400 times. Now they wanted imminent domain at the Federal level, and they wanted State governments preempted whenever a State materially altered an energy company proposal. In short, they wanted their projects approved without a delay, and they wanted the force of government behind them to assure that private property rights did not stand in their way. Over the next 4 years, the administration worked hard to give the energy companies exactly that policy. For example, on April 10, 2003, the Executive Office of the President issued a statement in strong support of the new Federal imminent domain authority. Pushed by both the White House and industry, Congress tried to enact the provision. Democrats raised objections to the new Federal imminent domain policy. We attempted to offer a floor amendment to strike the provision in both 2003 and again in 2005. Unfortunately, the House Rules Committee prevented these amendments from being considered on the House floor. Remarkably, Congress simultaneously dealt with another imminent domain issue in a completely different way. In June 2005, just 2 months after the House had voted to create this sweeping new imminent domain authority, the Supreme Court decided Kelo v. City of New London. This opinion upheld the States' authorities to use imminent domain in certain circumstances. The response from Congress was swift and furious. Republican leadership immediately brought legislation to the House floor to limit the Supreme Court decision. They decried the opinion as an attack on private property rights. In reality, the Kelo decision was far less intrusive than the energy provisions passed by Congress 2 months earlier. That is why this hearing is so important. Instead of more rhetoric about property rights, this subcommittee is taking a hard look at the real-world impacts of the provisions. No Member of Congress wants their District to suffer blackouts, but this isn't about blackouts; it is about respecting State authorities, ensuring adequate protections for cultural, historic, and environmental values, and making sure private property rights are protected against needless abuse. I look forward to the hearing and the testimony of today's witnesses. Thank you, Mr. Chairman. [The prepared statement of Hon. Henry A. Waxman follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you, Mr. Waxman. The Chair recognizes Mr. Issa. And did you want to make the announcements? Mr. Issa. Yes. Mr. Chairman, I would like to ask unanimous consent that Members who are not members of the committee be allowed to sit on the dias and make opening statements and ask questions at this time. Mr. Kucinich. So ordered. Mr. Issa. Mr. Issa. Thank you, Mr. Chairman. I will submit my entire opening statement for the record and just paraphrase one small element. I want to associate myself with both of the previous opening statements, all three of them. This is a piece of legislation that cuts two ways. I think all of us want to make sure that real congestion and real impediments to interstate commerce be, in fact, dealt with, and dealt with by the Federal Government. At the same time, the legislation previously passed now gives us some questions about whether or not perhaps there were some additional items that were left out of it, concerns of States, States' rights, private land use. I would say in my own home State of California, and particularly in southern California, where what we call the sunrise path, or the path that runs near our Mexican border, one of the paths that has historically been one of the shortfalls that has led to power outages, one of several in the State, is of concern because it only has a choice of going through either various Federal land, including tribal land, or going through a large State desert park. Most of these areas are not inhabited and most of these areas do not have any significant vegetation above about the 1 foot level. Having said that, finding a path has been a vexing problem, and often the State has found itself in an odd situation. It has found itself wanting to protect the empty space for all, while, in fact, having the alternative be the space which has people in it, and so we have paths in California, neither of which are acceptable for some reason, all of which are stalled, that, in fact, are considering tearing down houses rather than being visible perhaps 60 or 90 miles from some area of natural wilderness. That makes for a very strange situation that exists in California. I don't pretend it exists in every State in the Union. Certainly we are not looking at battlefields and highly populated areas in the case of most of ours, but I do look forward to this hearing and to follow-on legislation. With that I yield back, Mr. Chairman. [The prepared statement of Hon. Darrell E. Issa follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. The Chair recognizes Mr. Murphy. Mr. Murphy. I thank the chairman for holding this hearing and allowing other Members to sit as part of our panel today. Mr. Chairman, I hope that this hearing, in part, will expose two fallacies with regard to our current policy through FERC and the siting of transmission lines and other energy facilities that we have witnessed in the State of Connecticut. With the chairman's indulgence, I would like to submit for the record testimony of M. Jodi Rell, our Governor, today. Mr. Kucinich. Without objection. Mr. Murphy. Her testimony mirrors the thoughts of many of us from Connecticut, that these two fallacies that hopefully we will be able to overcome, in part through this hearing and in part through our discussions going forward: one, that our Federal Regulatory Agency can be an effective substitute for local processes. As Chairman Waxman has already said, there is simply no way for a removed Federal agency to be able to substitute for the concerns on the ground in a State like Connecticut, or any other State in this Nation. There is no way for this agency to know the true scope of the environmental issues, the private land rights issues, and the public safety issues that surround the siting of a very complex and large energy facility. In Connecticut we have had particular experience with this one. We have made simple requests of the Federal Regulatory Agency to come to Connecticut and hold a simple public hearing in order to air out many of the concerns that local landowners have. We have been denied. It is simply hard, in the face of that refusal, to understand how we can have the substitute for that kind of local State oversight. The second fallacy is that there is some divergent State and Federal interest upon the issue of electricity transmission. We in Connecticut understand the difficulties that confront our system and we are just as interested in making sure that we have the transmission capacity as the Federal Government is. We struggle with that issue just as they do here in Washington, and we believe that our State approval process will strike the right balance between local concerns and the concerns of our electricity grid. With that, Mr. Chairman, I am very pleased to be part of this hearing and very interested in being part of the legislative effort that goes forward today. [The prepared statements of Mr. Murray and Governor Rell follow:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you, Mr. Murphy. The Chair recognizes Congressman Wolf. Mr. Wolf. Thank you, Mr. Chairman, for having the hearing. I am not a member of the committee and would like to submit questions at the end if I may, but I want to thank you. I also want to thank Mr. Issa and Mr. Davis for seeking this hearing. I will work with Mr. Hinchey on his bill, with these other bills, as I told him, to see what we can do to pass them. I want to associate myself with all of the comments that were made. Being an invited guest, I will not have a formal statement, but thank you for the hearing, thank you for the intensity, and thank you for the commitment. We will do everything we can to deal with this issue. I yield back. Mr. Kucinich. Thank you, Mr. Wolf. Mr. Higgins, member of the committee. Mr. Higgins. Thank you, Mr. Chairman. I ask for unanimous consent to enter Mr. Arcuri's statement into the record. Mr. Kucinich. So ordered. Thank you very much. [The prepared statement of Hon. Michael A. Arcuri follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] M. Kucinich. The Chair recognizes Mr. Hall. Mr. Hall. Thank you, Mr. Chairman, and thank you both our ranking members for allowing Members who are not on this committee to attend and to ask questions. I will just briefly say that in my District there are many questions being raised and many lawn signs being put out on virtually every home in the affected areas around the New York Regional Interconnect [NYRI] path, which has been proposed under this section. There is a lot of concern about imminent domain seizure for profit by a largely foreign-owned company, the owners of which are not readily available to the public, and them seeking a court decision of being a public benefit and thereby having imminent domain rights, a private entity to seize private property for profit. I think that is something a step further than what we saw in the New London case, which was the city of New London seizing, municipality seizing by imminent domain private property and then turning around and selling it for use for private property. This is a direct transfer from private to private, which I don't really think the majority of the American people would like to enter into lightly, especially because we are having a debate about energy right now in this country. It is very important. We are really just starting to have this debate, and the more decentralized the sources are, the more renewable decentralized alternative sources come up, be they low-head hydra sites or wind, which is growing rapidly in New York, or other power generation that are not a single huge generating point at one place and then the need to transfer that power to a municipality far away where a huge amount of consumption is centralized. The mayor of New York, for instance, just proposed this weekend in his Sustainable New York City Proposal, a concept of rooftop wind, which anybody who has been on the roofs of the big buildings of New York or the Windy city of Chicago, for instance, would know that as the air mass accelerates up over a mountaintop or a collection of buildings it increases in speed, and that may be a place that wind can be harvested. The more we do those kinds of things that generate power where the power is being consumed, the less need there will be for this sort of radical seizure of private land to transmit electricity. So I appreciate the opportunity to listen and to ask questions and thank you again, Mr. Chairman. Mr. Kucinich. Thank you very much, Mr. Hall. Mr. Issa, your unanimous consent? Mr. Issa. Yes, Mr. Chairman. I ask unanimous consent that a statement from the Edison Electric Institute be put into the record. As you know, they are the preeminent analysis organization as to energy here in Washington. Mr. Kucinich. So ordered. The Chair recognizes Mr. Hinchey. Welcome. Thank you for being here. Mr. Hinchey. Thank you very much, Mr. Chairman. I very much appreciate your holding this hearing, and I want to express my appreciation to you for inviting others of us to attend it with you. I think that you are focusing on a very important subject here. As you know, any aspect of energy is a critically important issue for all of us to deal with, and it has to be dealt with in the most intelligent and respectful and effective ways. The Energy Policy Act of 2005 has become one of the most controversial pieces of legislation that has come before the Congress recently. It was recognized as such at that time by many of us, particularly those of us who voted against it. I am just going to mention one aspect of that bill, which is the focus of this attention, and the legislation which I and Mr. Hall and my two friends from Virginia have introduced, which has been mentioned earlier, and that is the ability that this legislation gives to ignore very important constitutional and legal provisions in our country, States' rights, and the rights of private property. One of the things that this bill does is it allows the Secretary of the Department of Energy to provide energy companies the ability to circumvent State authority by applying for permits to build electric transmission lines and to do so directly with the Federal Energy Regulatory Commission, ignoring completely the fact that constitutionally and legally these kinds of issues ought to be handled by the State and by localities. So if a State would withhold approval for a transmission line permit for 1 year because they felt that transmission line permit had to be looked at carefully and understood, if they had to do it for more than 1 year, then the energy company could go directly to FERC and get the authority to put this transmission line right through the State, even though the State had not approved it. If the State requires the mitigation of the project that the applicant believes makes the project economically unfeasible, they can go directly to the Federal Government and get the right to construct these corridors. Or if the utilization does not serve end-use customers in that State, well, they can just circumvent the State, build the transmission line on the basis of the authority given to them by the Federal Energy Regulatory Authority on the basis of actions previously taken by the Secretary of Energy. The act offers no limitation on where a Federal transmission corridor can be designated; therefore, National and State parks, land protected with conservation easements, historic battlefields, and all private property, even school yards, could be subject to the siting of these new electric transmission lines. Additionally, all private lands would be subject to the new Federal imminent domain authority for approved projects, when imminent domain authority has been traditionally and lawfully the right of State and local governments. So the issue that we are dealing with today, Mr. Chairman, is a very critical one, and we are all very grateful to you for the opportunity to give it the kind of airing that it ought to get in the context of this hearing. I thank you very much. Mr. Kucinich. I thank the gentleman. If there are no additional opening statements, the subcommittee will now receive testimony from the witnesses before us today. I am pleased to have such a distinguished panel of witnesses here to address section 1221 of the Energy Policy Act. On Today's first panel, our subcommittee is pleased to have the following witnesses: Assemblyman Paul Tonko, who is a lifelong resident of the city of Amsterdam, NY, and has represented the 105th District in the New York State Assembly since April 1983. Welcome, Representative Tonko. Representative Tonko currently serves as the chairman of the Committee on Energy for the New York State Assembly. Next, Representative H. William DeWeese. Representative DeWeese, welcome. Representative DeWeese has represented the 50th District in the Pennsylvania House of Representatives since 1976. He has served as Speaker of the Pennsylvania House of Representatives and currently serves as majority leader. We are glad to have you here, sir. Mr. DeWeese. Thank you. Mr. Kucinich. Next we will hear from Chairman Kurt Adams. Mr. Adams has served as chairman of the Maine Public Utility Commission since 2005. Prior to that he served as chief legal counsel to Maine Governor John Baldacci. Thank you for being here, Mr. Adams. Elizabeth Merritt is the deputy general counsel for the National Trust for Historic Preservation, where she has served as in-house counsel for 24 years. The National Trust for Historic Preservation is a private, nonprofit organization chartered by Congress in 1949 to further the historic preservation policies of the United States. And we have Paul Koonce. Mr. Koonce serves as chief executive officer of Dominion Energy, which is responsible for electric and gas transmission and storage operations for Dominion Resources, Inc. Thank you very much to Ms. Merritt and Mr. Koonce for being here. Finally, Mr. Miller, Chris Miller, has served as president of the Piedmont Environmental Council since 1996. He is responsible for the overall management and strategic planning for the Piedmont Environmental Council, which had been very successful in protecting Virginia's landscape through conservation easements. Welcome to all the committee members. It is the policy of the Committee on Oversight and Government Reform to swear in all witnesses before they testify, so I ask the witnesses if they would please rise. [Witnesses sworn.] Mr. Kucinich. Let the record reflect that the witnesses answered in the affirmative. I am going to ask that each of our witnesses now give a brief summary of their testimony, and to please keep this summary about 5 minutes in duration. Bear in mind that your complete written statement will be included in the hearing record. At this time the Chair recognizes the distinguished representative, Mr. Tonko. STATEMENTS OF PAUL D. TONKO, CHAIR, COMMITTEE ON ENERGY, NEW YORK STATE ASSEMBLY; BILL DEWEESE, MAJORITY LEADER, PENNSYLVANIA HOUSE OF REPRESENTATIVES; KURT ADAMS, CHAIRMAN, MAINE PUBLIC UTILITIES COMMISSION; ELIZABETH MERRITT, DEPUTY GENERAL COUNSEL, NATIONAL TRUST FOR HISTORIC PRESERVATION; PAUL D. KOONCE, CHIEF EXECUTIVE OFFICER, DOMINION RESOURCES, INC.; AND CHRIS MILLER, PRESIDENT, PIEDMONT ENVIRONMENTAL COUNCIL STATEMENT OF PAUL D. TONKO Mr. Tonko. Good afternoon, Chairman Kucinich, Chairman Waxman, Ranking Member Issa, Ranking Member Davis, and members of the subcommittee. Might I also express my appreciation for the attendance of good friend and former colleague, Congressman Hinchey and Congressman Higgins, and also a good partner in government, Congressmember Hall. It is a pleasure to be before you, Mr. Chairman. I have submitted written testimony and will provide for you a consolidated version. I also point out that my turf is the city of Schenectady, the electric city. My name is Paul Tonko and I am a member of the New York State Assembly and Chair of the Energy Committee, a role in which I have enjoyed serving for the past 15 years. During my tenure, few issues have given rise to the concern and sense of disempowerment than the potential exercise of Federal preemption regarding transmission line siting and what it has created. There is little confidence at this moment that Federal Government officials, who are far removed from the physical and socio-economic location of local proposals, will be able to fully appreciate the environmental, economic, and social impacts of long-range, high-voltage transmission lines. The purpose of my testimony today is to support a reversal of those provisions of the Energy Policy Act of 2005, which permits the Federal Energy Regulatory Commission to finally determine the siting of electric transmission lines. This newly conferred regulatory power may hold hostage the ability of States to craft and implement energy policy best suited to the States' needs and policy goals. What is needed at the State level is the freedom to take a holistic approach to energy policy, an approach which looks at all the supply side and demand side options available without fear that such policies, programs and decisionmaking could be trumped or thwarted by private interests seeking alternate Government intervention. New York is certainly one of the battleground States in this particular arena. New York has already been host to a transmission line proposal which has sought early access to the provisions of section 1221 of the Energy Policy Act. At an Assembly Energy Committee hearing regarding this proposal, the committee received testimony from your colleague, Maurice Hinchey, here today, who was able to speak authoritatively on the dynamics which resulted in the provisions of the Energy Policy Act which you are now examining. In that testimony, Congressman Hinchey reiterated his concern that provisions of the new act were intended to erode State and local jurisdiction over proposed projects. Thus, it appears that these Federal policies may not have been drafted with the protection of the public interest in mind. Given New York's experience with creating energy policy behind closed doors, I am well aware of the consequence of creating energy policy that does not meet the multiple needs of all consumers and energy service suppliers. More to the point, these provisions should never have been incorporated into statute, and the time to repeal these provisions is now. Many times elements of emerging State energy policies are the result of the absence of Federal Government policies and programs to do the same. For example, in New York and the northeast, more broadly, the Regional Greenhouse Gas Initiative, a regional compact amongst 10 northeastern States, has been initiated and is poised to establish a cap in trade program to control emissions of carbon dioxide, primarily from electric-generating plants. While the possibility that energy prices may increase as a direct result of capping of carbon dioxide, other energy policies are being crafted and implemented to help consumers better control their energy use, thereby reducing their energy costs, and possibly bringing down overall energy prices in the long run. Individual energy policies are only effective when they are implemented as part of the comprehensive energy plan. Outside factors, or possibly wild cards, can only disrupt the orderly implementation of complementary energy programs which have been designed according to the needs of the system, a forecast of prices from which appropriate incentive levels are set, and the market potential for specific technologies in that given location. Last week New York's Governor Eliot Spitzer announced just such a comprehensive energy plan. This strategy is premised on the achievement of a 15 percent reduction in energy consumption by 2015. The goals of this new policy are to simultaneously lower New York's high cost of energy, while expanding the supply of cleaner generation sources. Further, implementation of this policy requires that all resources be enlisted to achieve these goals, balancing demand side options with supply side options. This type of energy plan will also benefit the widest spectrum of economic interests, and not merely give preferred access to very large capitalized corporations. Certainly the policies outlined by Governor Spitzer will provide an opportunity for new transmission lines to be constructed in New York State; however, a transmission line which does not comport with the policy goals of the comprehensive energy plan and is focused solely on maximizing profit opportunities to the project developer could jeopardize the overall plan. Transmission line proposals which do not comport with comprehensive State-level planning should not be given new life through Federal Government preemptive power. In conclusion, I would like to thank the subcommittee for this opportunity to present this testimony and respectfully and strongly urge a reversal of the policies embodied in section 1221 of the Energy Policy Act of 2005. Repeal that provision in my message on behalf of the Energy Committee I chair. I will be happy to answer any questions that members of this subcommittee may, indeed, have. Thank you. [The prepared statement of Mr. Tonko follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you very much, Representative Tonko. Representative DeWeese, thank you. STATEMENT OF BILL DEWEESE Mr. DeWeese. Thank you very much, Mr. Chairman, Congressmen, Congresswomen, staff. My name is Bill DeWeese, and I certainly appreciate the opportunity to appear before the members of the Subcommittee on Domestic Policy and provide some comments on the implementation of section 1221 of the Energy Policy Act. Parenthetically, I would like to thank Congressman Hinchey for his negative vote. I think it was pregnant with common sense and a respect for States' rights. I offer these remarks not only as a member of the 50th Legislative District, which encompasses all of Green County, parts of Fayette and Washington County in southwestern Pennsylvania, but as the current majority leader of the Pennsylvania House. I have 10 quick points, two or three sentences each. No. 1, as it stands today, FERC, the Federal Energy Regulatory Commission, can use its imminent domain power to locate and construct a transmission line, regardless of what our Pennsylvania Public Utility Commission finds and rules. No. 2--and obliquely I referred to this when I mentioned my compliment to Congressman Hinchey--this is an unprecedented usurping of States' rights. As a little boy, the term ``States' rights'' had a vulgar and sometimes malignant connotation, but this is an absolute State right, and our Pennsylvania Public Utility should not have its powers arrested. No. 3, we in Pennsylvania understand the need for reliable power and are willing to do our part for the PJM grid. We know that the American consumers and companies up and down the east coast need electricity. No. 4, we are willing to do what we can to allow the Federal Government to be involved, but we don't want it to impose its long arm and its will into our back yards, into our green spaces, and into our lives. No. 5, if the Federal Government is allowed to dictate on this issue, where does it end? Will they come up to Green County and tell us where we are going to put a nuclear power plant or a hydroelectric plant or a windmill farm? No. 6, if section 1221 of the Energy Policy Act of 2005 is not repealed--and I certainly join my colleague from the Empire State and request that it is repealed--we will necessarily strip the States of their right to govern their own future when it comes to citing and construction of high-powered transmission lines. Public participation and regulatory review be damned. No. 7, the following is a mere snapshot of Pennsylvania's economic, cultural, historical, and natural and scenic resources. We have about 2,300 and 23,000 acres of farmland that has been preserved through our Commonwealth's agricultural and land preservation program. We have 120 State parks on 283,000 acres, 20 State forest on over 2 million acres, 300 State game lands on over approximately 1.5 million acres. Pennsylvania State forest land is one of the largest expanses of public forest land east of the Mississippi River. We have Gettysburg National Park. We have Valley Forge National Park, Fort Necessity National Battlefield. We have 42 other places in Pennsylvania that are listed on the National Historic Record. No. 8, under the guidance of Governor Edward G. Rendell, Pennsylvania has become one of the first States to implement an alternate energy standards portfolio. No. 9, nobody has convinced me or any of my constituents that the proposed power line is in the public interest. What I have become convinced of is the fact that at the end of the day Pennsylvania and the Pennsylvania Public Utility Commission should make these determinations, not the Federal Energy Regulatory Commission. No. 10, and finally, there is no doubt in my mind that section 1221 of the Energy Policy Act should be repealed post- haste. With that, I will continue my efforts to oppose all efforts to designate the National Interest Electric Transmission Corridor and any projects, Mr. Chairman, seeking to locate and construct interstate high-voltage transmission lines in the Commonwealth of Pennsylvania. Thank you very kindly. [The prepared statement of Mr. DeWeese follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you very much, Mr. DeWeese, for that very powerful statement. The Pennsylvania PUC chairman also has concerns. Without objection, I will put into the record the statement of Wendell Holland, chairman of the Pennsylvania Public Utility Commission, addressed in remarks to this committee. Without objection, thank you. [The prepared statement of Mr. Holland follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Next we are going to hear from Mr. Adams, State of Maine. Welcome. STATEMENT OF KURT ADAMS Mr. Adams. Thank you, Chairman Kucinich, members of the Subcommittee on Domestic Policy. My name is Kurt Adams, and I am the chairman of the Maine PUC. I am very pleased to be here before you today to discuss the implementation of section 1221. Section 1221 directed the Secretary of Energy to conduct a congestion study, and that will be most of what I talk about today. The congestion study was to be a nationwide study of electric transmission congestion. The study was released on August 8, 2006. It is supposed to be renewed every 3 years. The Secretary may designate any geographic area experiencing electric energy transmission capacity constraints or congestion that will adversely affect consumers as a national interest corridor. Section 1221, however, requires the DOE, before it exercises this authority, to consult with affected States in conducting the congestion study. Only after consulting with the affected States is the DOE to issue the mandated congestion study. As is clear from the appendices to the congestion study, DOE never contacted or met with any Maine regulator or government representative in the process of conducting the study. The study found Maine's New Hampshire interface and Maine's interface with New Brunswick to both be contested and identified the Maine/New Hampshire interface as one of the top 40 congested interfaces in the eastern interconnect. DOE did contact the Maine PUC on October 6th, and, after communications from our delegation, had a subsequent meeting with the PUC and Maine delegation staff in December 2006, but these after the fact meetings cannot cure DOE's lack of consultation that was required by statute prior to the release of the congestion study. The congestion study identified several congested pathways in New England and identified the region as a congestion area of concern. It is worth noting that the New England Governors Conference and the New England Council of Public Utility Commissioners also objected over the lack of consultation, and, to the best of my knowledge, there was not a single Governor, a single PUC, or a single elected or government official from any New England State consulted by the DOE consistent with the law. The DOE's failure to follow the simple requirements of section 1221 mean that the congestion study, as it currently stands, cannot be used as the basis for designations of corridors in Maine or New England. The congestion study is fundamentally legally flawed as to that region. In addition, getting to the merits of the congestion study--and I am tempted to start making this seem like a PUC hearing room, but I fear everyone will fall asleep--we do very detailed analyses in PUC hearing rooms. We look very carefully at what is behind load flows. We look very carefully at reliability questions. That is what we do for a living. When we looked at the congestion study, there is insufficient support for the study's finding of congestion at the New Brunswick/Maine border, and at the Maine/New Hampshire border, and I will just touch on this briefly, but it is concerning to us. We individually and through NECPUC, our regional regulators association, and NARUC, our national association, have sought access to the load flow studies, input data, and modeling used by DOE and its consultants in arriving at the conclusions in the study. However, it does not appear that DOE has released all of the inputs and modeling data it relied upon to make its findings of the congestion study. What it has released does not appear to support its conclusions. Release of all of the data is important, because the DOE's conclusions in the study conflict with other publicly available information about congestion in New England. For instance, ISO New England, our RTO, our grid operator, the experts in maintaining reliability in our region, do not believe that the Maine/New Hampshire interface is meaningfully constrained. They have said so to the DOE. In addition, although not addressed in the report, even though it is publicly available information, two factors will greatly reduce or eliminate congestion from New Brunswick to Maine during the study timeframe. There is a new transmission line being constructed between Maine and New Brunswick as we speak, and it is going to be energized very soon. That new line will increase transfer capability by 300 megawatts over an interface that currently appears not to be congested. The second widely known fact is that in New Brunswick a nuclear power plant will out for service for 2 years. That will also relieve pressure on the Maine/New Brunswick interface and reduce flows that typically go from New Brunswick into New England. This information was readily available to the DOE, but it was not or does not appear to have been considered in the congestion study. At this moment we don't know. It is worth noting, in closing, that both of those facts would have been easily ascertainable had the DOE consulted with the Commission. Thank you. [The prepared statement of Mr. Adams follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you very much for being here, Ms. Merritt. Please continue with the testimony. STATEMENT OF ELIZABETH MERRITT Ms. Merritt. Good afternoon, Mr. Chairman and members of the subcommittee. I am Elizabeth Merritt, deputy general counsel for the National Trust for Historic Preservation, and we really appreciate the opportunity to testify before you about section 1221 of the Energy Policy Act and the designation of national interest electric transmission corridors. We are particularly concerned that the Department of Energy and other Federal agencies involved in implementing the act should comply with the National Environmental Policy Act and section 106 of the National Historic Preservation Act prior to designating these national corridors. Section 106 is the law that requires Federal agencies to take into account the effects of their actions on historic properties, in particular, prior to making decisions that could harm them. Section 106 is implemented through a consultation and review process that seeks alternatives to avoid, minimize, and mitigate adverse effects on historic properties. Unfortunately, the Department of Energy has made it very clear that it does not intend to comply with section 106 or with NEPA prior to designating any corridors under section 1221. In our view, this is wrong, and we think Congress should clarify its intention that the agency should be conducting these reviews now, not after corridor designation has already occurred. As you summarized, Mr. Chairman, the designation of national corridors will have draconian results, including the potential effect of overriding or preempting reviews by State and local governments and by other Federal agencies. If a State regulatory board doesn't approve an application for a power line in the designated national corridor within 1 year, the Federal Government can take control of the review process and approve the project, itself, even if the State has denied the application for legitimate reasons under State law or has requested the consideration of alternatives and mitigation measures that the applicant would prefer not to include. Most disturbing, section 1221 authorizes the broad use of Federal imminent domain power to advance these projects to construction. In other words, national corridor designation will virtually guarantee the approval of any proposed transmission lines within the corridors. As a result, we believe it will be impossible to ensure any meaningful consideration of alternatives after those corridors have been designated. That is why it is so important for NEPA and section 106 review to occur now, before those corridors are locked into place. I would also like to summarize a few of the types of historic and cultural resources that are at risk and the ways in which these resources are especially threatened by the visual impact of a major power line. The map prepared by the National Park Service which is attached as the last page of our testimony--and I also brought a larger poster copy of the map--shows that a wide variety of our Nation's most significant public historic places are in close proximity to these proposed transmission corridors that are currently being considered. These resources include historic battlefields, rural landscapes, historic districts, and other places from our Nation's past that still retain their authentic setting. These areas derive their significance and their ability to convey the story of our history in large part from their visual context. These are places that offer members of the public the opportunity to take a step back in time in order to understand our Nation's heritage by seeing the world through the eyes of those who lived in an earlier age. It is important to understand that in most cases harm to historic places can be even more difficult to mitigate than harm to environmental resources. Historic places are unique, authentic, and irreplaceable. A historic battlefield cannot be moved. It cannot be recreated like a wetland can. It cannot be planted or bred, like an endangered species. Many of these historic battlefields and landscapes have sweeping views that are highly significant. Visual intrusion into those views cannot be avoided by shifting a power line a little to the left or a little to the right within the designated corridor. The massive infrastructure that is associated with these power lines cannot be camouflaged by planting trees to shield the view. Once the corridor is designated, these visual impacts will be unavoidable and irreparable. I also want to specifically mention the impact of the proposed corridors on national heritage areas. As you can see from the Park Service map that we have attached to our testimony, many of the proposed corridors would cut right through the heart of our national heritage areas. In contrast to the National Register of Historic Places, these areas are designated by Congress. They are areas where historic, cultural, and natural resources combine to form a cohesive, nationally distinctive landscape. However, the land is not acquired by the Federal Government because these areas have the imprimatur of congressional designation, they have been very effective in cultivating heritage tourism for community and economic development. The Alliance of National Heritage Areas estimates that every year 68 million people visit our country's 37 national heritage areas, and during those visits they spend more than $8.5 billion a year. Based on the enormous economic benefits for heritage tourism, we are concerned that local communities in these heritage areas may suffer economically, not just environmentally, if massive power lines are allowed to harm the historic areas and assets that draw these visitors in the first place. Beyond these resources, which are nationally significant and often publicly owned, the transmission projects may also harm thousands of other significant historic properties, including local historic districts, landscapes protected by conservation easements, and privately owned historic properties whose owners have relied on Federal, State, and local legal protections that could be overridden by section 1221. Many States have sophisticated regulatory agencies that review major transmission projects, and the legislatures have developed carefully crafted policies for balancing the considerations of energy distribution and the protection of sensitive resources. National corridor designation threatens to override and preempt these important State policies. In sum, the National Trust is very concerned about the ambiguities and the excesses of section 1221 of the Energy Policy Act and the way it is being implemented by the Department of Energy. We are especially disturbed that the Department does not intend to comply with NEPA or section 106 of the National Historic Preservation Act prior to designating any national corridors, and the impact of this approach could be the future approval of major power lines without fully considering alternatives or ways to minimize the adverse consequence. We urge Congress to amend section 1221 of the act in order to resolve the concerns that we and others have highlighted today. Thank you. [The prepared statement of Ms. Merritt follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you very much. The Chair recognizes Mr. Koonce. STATEMENT OF PAUL D. KOONCE Mr. Koonce. Thank you Mr. Chairman, members of the subcommittee, fellow Virginians Congressmen Davis and Wolf. I appreciate the opportunity to be here today. My name is Paul Koonce, and I am executive vice president of Dominion Resources and CEO of Dominion Energy. Dominion Energy operates the natural gas and electric transmission, natural gas storage, and L&G operations of Dominion Resources, one of our Nation's largest energy providers. Dominion supports the Energy Policy Act of 2005, including those sections that call for Government to establish NIETC corridors. In the wake of the August 2003, cascading blackout from the midwest to New York State, the entire country realized that we had to improve our Nation's energy infrastructure. Our economy and security simply cannot tolerate such events. The Energy Policy Act of 2005 recognized this need and established two important principles among many. First, that reliability is no longer voluntary. The Energy Policy Act of 2005 established nationwide reliability standards and backed those standards with substantial penalty authority, some penalties as high as $1 million per day per violation. Second, in areas where national interest are at stake and cross-border State permitting stymied, the Energy Policy Act of 2005 provides Federal backstop siting authority. While Dominion has not sought such authority, we support Congress' actions to protect and improve this vital network. The interconnected network of power plants, wind turbans, and transmission lines are an asset and strength to our entire Nation's economy. The NIETC designations and the Federal regulatory siting process, once it is established and tested, have the potential to improve the Nation's reliability. I stress potential is the operative word here. We must not pre-judge the outcomes, regardless of which side of the debate we are on. Last week Dominion filed an application with the Virginia State Corporation Commission to construct a 65-mile, 500 KB line to serve the greater northern Virginia region. Our six- volume filing for this project totals more than 1,000 pages and presents overwhelming evidence of need. It contains independent reports that validate the need, expert testimony on the load forecasting model use, and detailed information on the proposed route. Dominion has stated repeatedly that we intend to use our State siting process, but we recognize our industry and technology are changing. Wind does not blow uniformly, and in many cases natural gas and coal handling and transportation infrastructure does not exist to support power plant development in many metropolitan areas. I believe the Energy Policy Act of 2005 recognized this reality and has attempted to address our changed circumstance. Turning to customers, Dominion encourages customers to conserve energy when they can and use it wisely. The company offers a variety of energy and money-saving resources to encourage its customers to conserve. We supported House bill 3068, recently passed by the Virginia General Assembly. This legislation guides Dominion away from retail choice, and in doing so makes it our responsibility to do more. After years of promoting retail choice and giving retail providers access to time of use rates and smart metering, expecting that retail providers would aggregate customers and provide load management incentives, the market solutions did not achieve the level of success we had all hoped. This lackluster result, combined with the rate shocks witnessed in Maryland, Illinois, and Texas, is why Dominion was a leader in the discussion and moved toward enactment of House bill 3068. In sum, Dominion is a company dedicated to serving its customers, and doing so responsibly. Dominion is a company dedicated to the State siting process, and Dominion is a company that recognizes the importance of the interconnected electric grid and the potential role the Department of Energy and the Federal Energy Regulatory Commission may play to ensure our Nation's reliability. I appreciate the opportunity to be here today. I look forward to answering your questions. [The prepared statement of Mr. Koonce follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. We appreciate you being here too, sir. Mr. Miller, thank you. STATEMENT OF CHRIS MILLER Mr. Miller. Chairman Kucinich and members of the committee and Congressman Davis and Congressman Wolf, you have been wonderful leaders in this issue in Virginia. Thank you for the opportunity to testify. As president of the Piedmont Environmental Council, I have spent a decade on issues of land use planning, regional land use planning, and land conservation, and in that exercise, working with a professional staff, with thousands of land owners, and with the communities in the nine-county region that is almost the size of the State of New Jersey, we have learned a lot about a lot of policies, including energy policy, and about the potential impacts of transmission siting on those local, State, and Federal policies. I think I am here today to present a perspective from the land owner and local level. The result of implementing 1221, which creates this new power of Federal imminent domain, affects hundreds of thousands of land owners in Virginia and millions across the United States. The graphic that you see on the screen is the combined corridor request from PGM Interconnection, a regional transmission organization operating in 11 States and representing about 400 utilities. This is what the utilities of the mid-Atlantic area requested. Dominion is part of that process, in fact, shares the committee that put together this proposal. The implications are enormous. Every land owner, every jurisdiction within that area, which includes almost the entire State of Delaware--does include the entire State of Delaware, Maryland, most of Pennsylvania, parts of West Virginia, and Virginia now face the prospect of Federal preemption over an undefined set of potential corridors. Very specifically, PGM requested that authority be continued for at least 10 years, and that parts of it be expedited. In fact, they asked the Department of Energy to rule on these corridors before the end of 2006, December 31, 2006, and requested that a specific line-to-line that we are dealing with in Virginia be given special status no later than August 31, 2006. Those of us who live on the ground are concerned that the process by which this policy is being implemented is not protective of public interests and the balancing of the need for clean and reliable energy and the need to protect national and State resources, priorities that we have had long established. The process thus far has been described I think adequately by the representatives from New York, Pennsylvania, and Maryland, but from the perspective of our organization, when we learned of a potential corridor designation in Virginia we were the first to notify Governor Tim Kaine, we were the first to notify the Federal elected officials, we were the first to notify State elected officials, we were the first to notify local elected officials, and certainly the first to notify affected land owners. So just the basic idea of these corridors being designated, no one who is going to be affected was part of the process. When we asked for meetings with the Department of Energy we were told that they could not meet. Once they closed the comment period, October 10th, they refused to meet with representatives of PEC and have continued to state that a meeting with representatives of PEC would violate a prohibition on ex parte contact. So it raises real questions about how stakeholders are supposed to discuss the alternatives to transmission, discuss the mitigation that potential transmission corridors may require. Let me talk a little bit about the types of resources that are implicated, national resources. This is a perspective from Virginia. We have probably the highest concentration of Civil War battlefields. There are eight Civil War battlefields designated by the National Park Service as worthy for protection within the study area created by the Dominion and Allegheny request, by PGM's request. We have the highest concentration of nationally recognized rural historic districts. We are the view shed of the national scenic trail, the Appalachian National Scenic Trail. There are over 200,000 acres of land within this area that are visible from the Appalachian Trail, one of the most visited parts of the National Park System. We have 37 individual historic sites, including the homes of Chief Justice John Marshall of the Supreme Court, and a host of other important historic sites to both national, State, and local history. All of this area is part of a proposed national heritage area, the Journey Through Hallowed Ground, which Congressman Wolf and Senator Warner and Members of the delegations from Maryland and Pennsylvania have supported the Congress approving, and these proposed lines would cut right through the heart of that proposed heritage area. Let me argue this. Please refer in our testimony to the letter from David McCullough and James McPherson, probably the most recognized historians in American history. What they call for, what many energy leaders call for is a different process if we are going to go forward with national interest corridor designation, and that process would call for two things: openness, transparency; and a programmatic EIS. Why is that so important? This is a decision which has the potential to shift the market for energy in a dramatic way. Transmission lines will bias our future energy decisions in a very significant way, and now is the time, before designation takes place, to look at all alternatives, look at the environmental impacts, look at the impacts on other national interests, national priorities, and be sure the that balancing is done before designation, not after it is complete. Thank you very much for this opportunity. [The prepared statement of Mr. Miller follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. Thank you very much for your testimony, Mr. Miller, and thanks to all members of the panel. We are now at the point where members of the committee will begin with questions. The Chair will recognize for 5 minutes--each Member will have a 5-minute round of questions--the gentleman from New York, Mr. Hinchey. Mr. Hinchey. Thank you, Mr. Chairman. I want to express my appreciation to all of you for your very competent and informing testimony. We very much appreciate all of your being here. I would like to ask a question of Mr. Tonko, who is a dear friend and a colleague of mine formerly in the State House of Representatives in Albany, NY. Paul, you are one of the most informed and reliable people on this issue of energy that I know. I think that your importance of being here is very considerable. One of the main provisions of this act, as has been pointed out here over and over again, is 1221, which preempts the right of imminent domain and preempts State authority. Do you think it is possible for the States to maintain a reliable electric system without this kind of preemption, and States should be giving energy companies the right of Federal imminent domain? Mr. Tonko. The first point I would make is it is absolutely possible for States to do this work. We have been doing it for decades, if not a century, whereby States have maintained systems, albeit deregulation has entered into the mix. But I think it is important to recognize that, A, we have done it, we have a track record, B, no one has to tell me or a State that we have a congestion corridor. We know that. We are working with it, but we are developing comprehensive energy policy, especially with the onset of the new administration. It is a mix of phenomena that take hold in that comprehensive plan, from renewable energy to energy efficiency, demand side management, conservation, perhaps upping some generating facilities that have been not operating, and yes, perhaps transmission lines. But my concern about the preemption from the Federal level is that, once you develop a strategy and a plan you can then have that intercepted, interrupted by Federal action, which may not be the outcome we need. Where we need transmission, to what degree, how it is incorporated with renewables, how it blends with the strategy for efficiency, those are all important factors that will be, I think, not part of the mix if the Feds intercept and do their decisionmaking outside the context of that plan. So I think, because of our track record, because we didn't need anyone to tell us we had a congestion highway, because we need comprehensive strategies, and I would add to that if there are any incentives the Feds need to provide, it is to encourage interstate planning, creating the compacts where there is a better bit of understanding about how the States can deal with their inter-relationships. That is far more comprehensive and valuable than this heavy hand entering in, and perhaps at an inopportune time or without the discipline that is required to live in accordance with a given State's comprehensive energy policy. Mr. Hinchey. Thank you very much. There is also the idea that the only way to deal with the electricity needs is through the establishment of these massive transmission lines, but we know that there are other ways to deal with this. Would you comment for us on other aspects of this? What about more broadly distributed generation, energy efficiency? Are those the kinds of things we ought to be focusing attention on? Mr. Tonko. Absolutely. The aggressive nature of the plan that has been presented, to which I alluded in my testimony, by our new Governor is speaking to just that. I think there is an untapped resource in distributed generation. I think it is something that will get great focus. We need to think outside the box. I think that what we have in New York State is an opportunity to utilize our natural resources in a way that produces great energy outcomes, and to also emphasize renewables. Wind will become, I think, very much part of the solution. And we have said in testimony that we need to regard energy efficiency as an energy resource. Just as they drill and well various items out there, we need to tap into that resource and consider it a major player, a major solution in the outcome that allows us to avoid perhaps some of the additional transmission activity that won't serve useful. We have had contrary opinions as to whether or not more transmission opportunity actually serves us well in some cases. It may cause some additional disturbances or re-route disturbances in a way that may not be the kind of outcome we want for any of our States. Mr. Hinchey. Thank you, Paul. Mr. Tonko. Thank you, sir. Mr. Kucinich. I thank the gentleman. The gentleman from California, Mr. Issa. Mr. Issa. Thank you, Mr. Chairman. And thanks, again, for this hearing. I think it is very, very important that we look at legislation as soon as possible after it begins impacting our States. Mr. Tonko, I would like to ask you a question sort of in the abstract, because I think, as a legislator, and in the case of New York, it is a good what if. New York is between several States. If New York is under the in state commerce clause, if New York for some reason their failure to build transmission line was causing problems in Connecticut, and Connecticut came to the Federal Government and said, ``you know, we have done everything we can but we can't get our transmission line from X to Y,'' would you look into this and preempt other States, would you say that was within the historic--forget about this legislation, per se, but within the historic rules of the road similar to the interstate road system, would you say that in a sense there are some cases in which the FERC might appropriately come in and make sure something happened for interstate commerce reasons? Mr. Tonko. Right. Congressman, I agree it could be set into that historic context, but, more importantly, being done with comprehensive strategy, with interstate cooperation. That is the best assistance we could hope for from our Federal partners in government. Earlier Congressman Murphy talked about his concerns, and immediately coming to line was the cross-sound cable from Connecticut to Long Island, which was decided by FERC, and that decision was deemed to be a decision that was made on an emergency basis, which was later rerouted as a permanent solution. Now, I would suggest to you that outcome was not the best outcome for Connecticut, and I think that if you had encouraged through Federal policy intergovernment comprehensive planning, where we can avoid the need to step in and usurp State rights and bring and build a plan, constantly updating it and implementing it, we are in a new world of energy need out there, and I think that the interdependency that we all share as States--I look at the major impact from the blackout of 2003 in August 2003 befalling New York State, and the lack of maintenance of the infrastructure in a neighboring State caused disruption in our State. So the States need to have the reliance of Federal Government to bring about that cooperation, but not a heavy hand that tells you when to do things. Mr. Issa. But I think you hit the point. As a New Yorker, you have asked for that. You have said that we, in fact, somebody has to make sure that something going wrong in Cleveland doesn't turn your lights off. So the very case that is the balance, the reason that we may have to mend this don't end it, is the lights going off in the northeast; that, in fact, the system was not robust enough and, as a Federal Government, when you say we have to be fair, wouldn't it be fair to say that we have to give the States a chance to propose an interstate compact that they believe meets the test, and if they fail to do so the Federal Government still has a role on behalf of any one of the States or on behalf of the commerce? And I am saying this because I am very concerned that this hearing today could potentially cause people to say we will just scrap what we have and hope that the States agree. I think New York's lights going off shows that decades of loose agreements, all of which were designed to benefit each State, did tend to have every other State not looking at excess robustness to protect anyone other than themselves. Mr. Tonko. Congressman Issa, I think that you can accomplish these goals by working within the bounds of the existing law and encouraging the kind of---- Mr. Issa. This is existing law. Mr. Tonko. Well, within the context of the law that guided the process prior to preempting the process by encouraging the kind of planning that is essential. I think what was taken was a leap to the extreme without offering---- Mr. Issa. My time is limited, so I am just going to do one final one, and it can be for another member of the panel that would like to weigh in. If we require planning and if that planning is not executed on, wouldn't you all agree that, if you make the plans, the Federal Government holding you to those plans or to your accomplishing those plans is still within Federal jurisdiction under interstate commerce? Mr. Tonko. I would think there is a role to be played to make certain that plans--I think, very importantly, plans need to be developed, updated, and implemented, and if there is a role to encourage that without usurping the States' rights and without perhaps derailing regional compact, comprehensive plans, or individual State comprehensive plans, let's do it. But this I think supersedes in a way that is very disruptive. Mr. Issa. I just wonder if anyone can give me a ``yes'' to the question I asked. Mr. Kucinich. The gentleman's time has expired. I want to acknowledge that, but also go ahead and answer the question. Mr. Issa. I don't want to ask another question. If there is anyone on this panel today that can give me an answer of ``yes'' to the Federal Government having that role if the compact fails to occur or if one or more States fail to provide their share of it. I will leave it for the record, I think. I don't see anyone, unless Mr. Adams wants to answer. Mr. Adams. Your question is prior to the Energy Policy Act of 2005? Absent the Energy Policy Act of 2005 does the Federal Government have the authority under the---- Mr. Issa. No, should we do it constitutionally is the question, because we are considering, if we get rid of this act, do we scrap the whole idea that if one State doesn't meet the requirements, even if agreed, for another State, that the Federal Government should just sit on the sidelines and watch the lights go off in New York. Thank you, Mr. Chairman. Mr. Kucinich. Mr. Tonko, did you want to add anything? Mr. Tonko. No. I will stand with the answer I gave. Mr. Kucinich. Yes. The gentleman's time expired about 2 minutes ago. Mr. Issa. Thank you, Mr. Chairman. Mr. Kucinich. But let me, with unanimous consent, just ask a question or engage in a colloquy with my good friend. The question that was raised with respect to the 2003 power failure, which began in northern Ohio, the District I represent, if I remember correctly, the occasion of that power failure was not so much the lack of robustness of the system as it was the failure of maintenance by First Energy, which is our local power company. Mr. Issa. And for the chairman, I completely agree that we could look at an initial cause. What has been discovered, as I understand it from our work in the last Congress, was that the reason that the failsafes never stopped--in other words, Cleveland was allowed to go completely black, and the rest of the country should have stayed up. You should not be only as strong as one engine failing. So, as much as we know why Cleveland failed, the system was not robust enough to keep one after another from being pulled down, and that is where the interstate commerce question comes, because, Mr. Chairman, I am very aware that there are failures in 2005 act. The question is what is the legitimate role, and hopefully under your leadership we will define the limits of that role but not fail to meet that requirement of interstate commerce. When does the Federal Government have an appropriate role? I think the Cleveland to New York blackout is the best example where we as Federal officers, if we don't make sure the States do their job so that that network is robust enough, we will be held accountable. Mr. Kucinich. You know, maybe the gentleman and I could cooperate in producing another hearing on the relationship between the causative factors of the 2003 blackout as it reflects on some of these issues and other issues relating to capacity. I think that could be quite constructive. I am going to go to Mr. Hall right now for purposes of his asking questions. We are in a series of votes soon. Mr. Hall. I will make it quick. Mr. Kucinich. No, please, you get 5 minutes. Proceed. Mr. Hall. Thank you, Mr. Chairman, and thank you to all of our witnesses. Representative DeWeese, I would like to ask you, regarding the Allegheny Energy requests of March 2006, to designate a national interest electric transmission corridor they call the TRAIL project, Trans-Allegheny Interstate Line project, which, if it is approved, will give them power of imminent domain from Maryland through the tip of northern Virginia across western Virginia through southwest Pennsylvania and into Ohio, which is a remarkable stretch of imminent domain. Two questions about this. First of all, for a project of this size, how long would you expect the normal State permitting process, the environmental impact statements or what have you, to take? Mr. DeWeese. I do not know, but my speculation would be a 1\1/2\ to 2 years. My colleague from Maine would probably be more precise in extrapolating a Maine or a Pennsylvania Public Utility Commission dynamic. I only know that Wendell Holland, the chairman of the Pennsylvania Public Utility Commission, has expressed to Chairman Kucinich and the membership some of his reservations and comments, but I do not know the exact number of months that it would take. Mr. Hall. I could ask everybody at the table, are you aware of any such size projects that comes in through the normal environmental review process at under a year? I am not. I mean, in New York, I am familiar, as Mr. Tonko is. Mr. Tonko. Right. I think the 1-year timeframe is a very threatening situation. There needs to be flexibility. It is very murky. The definition of when the clock starts ticking is very murky. I think that it can be a very troublesome bit of nomenclature in the law that really might undo a very valuable project. Mr. Hall. Or, as one might put it, it is sort of a gone to the head of the State government saying don't screw up too many roadblocks or ask too many questions, don't drag the process out, or else it is going to get kicked out of your hands and up to FERC. Yes, sir. Mr. Miller. Our concern about the 1-year clock is that in many States the process of discovery, getting the data, acquiring the information, analyzing impacts is structured as an adversarial process. I mean, you have to ask the question, you have to do the interrogatories, you have to depose the witnesses, you have to review the testimony. For example, in the case of the 1,000-page filing by Dominion, all of the flow data was submitted in a sealed document, so it is not available to anyone to review. They are assertions and studies that back up assertions by making other assertions, but there is not public access, until the intervention process is triggered by the State Corporation Commission, to the actual flow data so that they can be independently verified. Similarly, as you have heard, at the Federal level there hasn't been access to the underlying data to make sure the conclusions were drawn fairly and with consideration of alternative perspectives. That process, by its very nature, can take more than a year. And it is interesting that Dominion in this case, while claiming not to plan on using the corridor designation and Federal imminent domain, has requested that the State rule on their application within a year of the date of filing, which is exactly the unusual characteristic of the Federal law. Mr. Hall. Thank you. Chairman Adams, can you tell me exactly what the Department of Energy has refused to share with your State? Mr. Adams. There are two categories of information. One, information when we look at what they provided, they provided, after a fair amount of complaining from NARUC, NECPUC, and a variety of individual States, they eventually posted on their Web site some certain assumptions that they gave their consultant, but in peeling that back the assumptions did not appear to be the whole picture and they just don't add up to the result, and a lot of the information we get, for instance, in a PUC hearing room that would lead us to conclusions about things like reliability or congestion we just don't see there. But, more troublesome, our public advocate issued a Freedom of Information Act request on the DOE, and there was an e-mail chain amongst DOE staffers talking about forwarding confidential information among themselves delivered to them by PGM, the New York ISO, and ISO New England. We have asked for that confidential information, and it has not been provided. DOE has actually said that they don't have it. So, from our perspective, from Maine's perspective, the dots just don't quite line up to the conclusions that they have come to, and that is what we don't understand. There does appear to be at least some information that they relied upon that either has been lost or misplaced or is no longer in DOE's possession to provide to us. Mr. Hall. Thank you, Chairman Adams. Thank you, Mr. Chairman. Mr. Kucinich. I thank the gentleman. Mr. Davis. Mr. Davis of Virginia. Mr. Koonce, thanks for being with us. Let me just start with you. I understand Dominion Power has filed its application with the State Corporation Commission last week to move ahead with the transmission line in Virginia. Is the intention to work through and abide by the decision of the State Corporation Commission with respect to the Meadowbrook Loudoun 500 KB transmission line? Mr. Koonce. Yes, Congressman, it is. We have had great success working with our State Corporation Commission. Every line that we operate today has been approved by that State Corporation Commission. We don't see that relationship changing. Mr. Davis of Virginia. I mean, there has been some concern in the community that the State process is now just a mere formality for utility companies located in the NIET corridors, but that is not your intention? Mr. Koonce. No, sir, that is not our intention. We have great confidence in our commission to weigh the issues, analyze the load flow studies, look at the need, make that determination, and provide the pathway for the company to move forward. Mr. Davis of Virginia. Now, in your application, which I understand is lengthy---- Mr. Koonce. That is correct. Mr. Davis of Virginia [continuing]. You make the case for a new power line. Can you just briefly highlight some of the needs--you did some in your testimony--in terms of the areas that are impacted to where the power would be going? Mr. Koonce. Yes, sir. We filed an application for a 65-mile line. It is a 500 KB system, moving from the western part of the State, traveling along an existing transmission line corridor, ultimately terminating at the Loudoun substation, which is just west of the Dulles International Airport. The line that we propose will transfer about 3,400 megawatts of energy into what has been described by many as the fastest- growing region in the eastern seaboard. Our load data certainly reflects that. It is a rapidly growing area. The transmission corridor that we have identified will be residing beside an existing 500 KB system, so there will be areas where we will be able to stay within the preexisting footprint. For example, where we cross the Appalachian Trail we have proposed to change the pole structures so that the two power lines can coincide within the existing footprint. There will be areas where we will have to acquire an extra 100 feet so that we can put the line adjacent to an existing information. And then there is much of the route that we won't have to take any additional right-of-way, the right-of-way is already suitable to this transmission line. Mr. Davis of Virginia. You are obviously aware of the public comment. You have done your best to minimize, assuming the need for it, minimize the taking of additional right-of- way, is that---- Mr. Koonce. Yes, Congressman. We have had five open house meetings where we have tried to show people how we would route the line, the structures that we would use. We have had over 100 meetings with community planning boards, chambers of commerce, and have participated in over 300 media interviews. We have done everything that we could to try to engage the community, and I think through the Piedmont Environmental Council and Virginians for Sensible Energy we, I think, have engaged the communities, and I think we have a good filing that reflects that. Mr. Davis of Virginia. You certainly have them engaged. There is no question. Mr. Miller, let me just ask you, do you think there is overwhelming evidence for the need for the proposed transmission line in northern Virginia? Do you share the same conclusions at this point? Mr. Miller. At this point we don't. The evidence we have been able to evaluate up to this point reaches very different conclusion, which is that, as NERC found in 2005, Virginia is adequately served, both generation and transmission, and that the need is being generated outside of northern Virginia and actually part of a much greater region than the larger PGM interconnection. The question then becomes: is this the best place to locate a line to serve that interregional need, and are there other solutions? One of the interesting things about the Dominion filing is that they attribute the amount of demand reduction that would be necessary to obviate the need for this line. Remember that they are using rather unusual contingency scenario where they close down Opossum Point and a line fails, so it is sort of a double whammy, not just a transmission issue. But, in addition to that, they then say that, in order to avoid building a transmission line, northern Virginia would have to reduce demand by 2,800 megawatts when, in fact, the area of demand that this line would be serving and the reliability that it would be serving includes all of Maryland and the District of Columbia. So if you spread that demand reduction over that area, it is less than 10 percent reduction for the actual service area. The point being, the kinds of initiatives that Maryland, that Governor Kaine has initiated for the State agencies, Government Rendell, Governor Corzine have all proposed would actually reduce demands from levels where these transmission lines may not be necessary. Our concern is that the analysis process, the data that is held as confidential and proprietary doesn't allow for any independent analysis of whether the conclusions reached and asserted actually match reality on the ground or accommodate potential future changes on the generation and demand management side. Mr. Davis of Virginia. But the State Corporation will be able to get all that, won't they? Mr. Miller. If they have time. But, as I was trying to say before, this is not a process where the application is only deemed sufficient when all of the information is made available. It is, unfortunately, structured as an adversarial process, and so the answers may not come in the first 6 months, 8 months, 9 months, twelve months. Mr. Davis of Virginia. Thank you. Mr. Chairman, my time is up. I do want to note the presence of John Stirrup, one of the Prince William County supervisors that is in the room attending to this. We appreciate your being here as well. Thank you. Mr. Kucinich. All right. Would the gentleman from Virginia yield for a question? Do you need more time? Mr. Davis of Virginia. I am OK. Mr. Kucinich. Sure. OK. The Chair recognizes Mr. Arcuri. Mr. Arcuri. Thank you, Mr. Chair, and I thank you for giving me an opportunity to be here. I would like to thank the panel, all of you, for being here. Assemblyman Tonko, thank you very much for coming down. Assemblyman, in response to one of the questions that my colleague from California asked you, do you think that there is a distinct difference between seeing to it that the States work together to prevent the kind of blackout that we saw on the east coast, as opposed to overruling a position that a State takes if a State chooses not to allow a corridor and then the Federal Government comes in and preempts it? Mr. Tonko. I think it is very important for us to bring States together in these regional compacts so as to address concerns that have already been documented, with the point in case being the 2003 blackout. You know, it wasn't about the robust issue, it was about communication, it was informing another State as to what was coming, and it was about maintaining a system as you theoretically had indicated in your guidelines. We need to make certain that kind of deliberative effort is made. There are also concerns. I look at the interrelationships or the potential partnerships amongst not only the New York ISO but the PGIM and New England ISO where we could develop, I think, sound policy and encouragement from the Federal level to deal with inter-ISO seams that would address not only economic outcomes but reliability potential. Mr. Arcuri. My other concern is this. If a State creates a policy that it chooses to, for instance, in New York, if the policy were to promote generation down State, wouldn't a power line such as being proposed create a disincentive to creating generation in another place, because what they are doing is bringing power from one place to another place rather than promoting generation? Mr. Tonko. It could. I think, again, in the case of New York State there needs to be ample opportunity, total opportunity to exercise our strategy as a State with a comprehensive plan. Mr. Arcuri. I just have one more question. And if the strategy of New York was to keep the cost of power down in a place like upstate New York where unemployment is high, then wouldn't taking power from there, driving up their cost, also serve as a disincentive for creating caps? Mr. Tonko. It absolutely would be a disincentive, and that is why I think the mix of energy efficiency, onsite distributed generation, conservation efforts, and renewables are all blended into the discussion and the determinations of policy within New York, and having some sort of preemptive process that could cause price fluctuations for regional outcomes in New York State would be a tremendous setback. Mr. Arcuri. Mr. DeWeese, do you see that in Pennsylvania, as well? Mr. DeWeese. I do. I do. I live in the heart of the coal fields, and we are honeycombed with the tritus of coal mining underground. We are scarred with the results of coal mining on top. Our water volume and our water quality are questionable. The paradigm that you offered seems to be very, very accurate relative to the future. Clean coal technology that Ed Rendell and a variety of other people in our State and General Electric are advocating seems to me a very, very aggressive alternative. We should be building plants where population bases exist. The river valleys and steel valleys of western Pennsylvania have paid their fair share over our national history, and we don't think that we should be developing power in those little corners in the red in the southwestern part of rural Pennsylvania for the burgeoning populations of the east. Mr. Arcuri. Thank you very much. Mr. DeWeese. Yes, sir. Mr. Tonko. Mr. Chairman, if I might again refer to the upstate economy, which has been a primary focus, energy costs obviously are a tremendous concern. If that comes at the expense of outcomes for transmission owners' profit margin and reduces our opportunity to revitalize the upstate economy, it would be a dreadful outcome. I think, again, it has to be looked at in totality. It has to be a holistic approach so that we can balance the needs for energy within New York State and to do that in partnership with neighbors and regional compacts. Mr. Kucinich. I thank the gentleman. The gentleman from Virginia, Mr. Wolf. Mr. Wolf. Thank you, Mr. Chairman. In the interest of time, thank you and Mr. Davis for the hearing. I want to thank the witnesses. If I may, I would like to submit a series of questions for the record, if I may. Mr. Kucinich. Without objection. Mr. Wolf. Again, thank you very much. [The information referred to follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. I thank the gentleman. I just want to assure Mr. Wolf and Mr. Davis that you have the complete and total cooperation of all of us on the committee relative to your concerns. I would like to ask some questions, and I understand there is a series of votes right now. What it is my intention to do is to finish with this panel, unless the Members are looking for another round. If you want to do another round of questions, let me know and I will ask if the panelists--if Members wanted another round of questions, would the panelists be able to stay. We will see how far we get. I want to start with Mr. Koonce. Sir, in your testimony you state that you are committed to the State siting process. Would you be able to assure this committee that Dominion would, under no circumstances, seek to preempt the State process by invoking section 1221? Mr. Koonce. Mr. Chairman, I could not make that commitment. Mr. Kucinich. Why not? Mr. Koonce. We are a company that provides energy and interstate commerce in many forms. We operate interstate natural gas pipelines. We are constructing a wind farm. And we provide energy throughout New England, as well as Virginia. There can be circumstances where we believe Federal back stop siting authority can have a use. I don't know the exact year, but in 1989 American Electric Power filed an application in West Virginia to construct a line into Virginia. It took them 13 years to construct that line because the two States could not reconcile their interstate conflicts. I would not make a commitment to this company. I would not make a commitment to this subcommittee to subject our customers to that same type of interstate conflict. Mr. Kucinich. Now, in 2002 the American Council for Energy Efficiency Economy [ACEEE], released a report that examined utility spending on energy efficiency in the year 2000. ACEEE ranked the States to determine which States were doing the most to become more energy efficient. At the top of that list was Connecticut. Connecticut spent just under $20 per capita on energy efficiency. At the very bottom of the list was Virginia. They found that Virginia utilities were dead last in their spending. Virginia spent nothing, zero. The Virginia utilities simply made no investment in energy efficiency. Now, in 2005 the ACEEE updated their report for the year 2003. Things have changed. Vermont had moved to the head of the pack. Utilities there spent about $30, $28.26 per capita on energy efficiency programs. Unfortunately, Virginia was still spending zero per capita on energy efficiency. Now, Mr. Koonce, according to your testimony today Dominion's hands are tied. You seem to be saying you have no option but to build a new transmission line, but you can't increase the efficiency within your service territory fast enough, but it seems your problem has been years in the making. Nothing was spent on energy efficiency in 2000, and today you have come before this committee explaining that your demand is so high that it has limited your options. Now, Mr. Koonce, how much did Dominion invest last year per capita on energy efficiency? Mr. Koonce. Mr. Chairman, that report captured ratepayer- funded energy efficiency. In 1999 the General Assembly passed the Utility Restructuring Act. The purpose of that act was to promote, in its widest and complete form, retail competition. The 1999 Utility Restructuring Act contemplated that our generation, transmission, and distribution entities would be functionally separated and ultimately legally separated such that retail providers could come into the marketplace and could look at peak versus off-peak consumption and could come up with creative packages, offerings to customers so that they would be economically incentive to engage in demand side management conservation. Mr. Kucinich. I understand that, but your question is how much did Dominion invest last year per capita on energy efficiency. Mr. Koonce. I don't have that number today. What I can tell you---- Mr. Kucinich. Would you be able to submit that information for the record? Mr. Koonce. I will seek to do that. I will tell you that we still have and continue to work with all of our commercial industrial customers, as well as our homebuilders. We have certified energy planners. They work throughout the year---- Mr. Kucinich. If you could submit that planning, those documents to the committee it would be very helpful. I am sorry to interrupt you. We have just got a couple of minutes before we have to run and vote. Do you know how much you are going to spend this year then on energy efficiency? You don't really know? Mr. Koonce. Again, the Virginia General Assembly, which is charting the course for Virginia, which we certainly support, passed a new law this spring. That law required the State Corporation Commission to pull together across-State group to identify ways to cut energy consumption by 10 percent. Mr. Kucinich. What I would like, if you could, sir, is for you to submit to this committee, if you have such information, how much money Dominion expects to invest per capita on energy efficiency, if you could submit that, because in the case of Dominion the facts seem to suggest that there has been a failure to anticipate the need for energy efficiency ahead of time. I would like to ask about another important issue and see if Dominion is acting proactively. There is no longer any doubt that human activities are resulting in global climate change. What steps are you taking to reduce Dominion's greenhouse gas emissions over the coming decade? Mr. Koonce. Mr. Chairman, in 2003 Dominion was the first utility to enter into an agreement with EPA. That agreement called for our company to spend $1.7 billion to install NO<INF>X</INF>/SO<INF>X</INF> pollution control equipment. Since that time, we have also acquired the generation assets in New England of U.S. generation. We will be spending, in total, $2.5 million on fossil plants to improve air quality, both with NO<INF>X</INF> and SO<INF>X</INF> pollution control equipment. We anticipate that by the year 2015 we will reduce our emissions by 70 percent, at the same time increasing plant output by 30 percent. Mr. Kucinich. Let me just ask you one question before we take a break for votes. How about reduction in CO<INF>2</INF> emissions? Mr. Koonce. We have plants that are in New England, as part of the REGI program, where we feel confident that we will be in compliance with the regulations as they are promulgated. We are---- Mr. Kucinich. But are you able to state--I am not talking about regulation, I am talking about plans to reduce greenhouse gas emissions. That is two different things. Can you provide this committee with information about the efforts that you are taking to provide for reductions in CO<INF>2</INF>? Mr. Koonce. Sure, we can provide that information. Mr. Kucinich. We appreciate that. At this point the Chair is going to call this committee in recess for 45 minutes. We have a series of five votes. We will return. Mr. Hinchey. Mr. Hinchey. Thank you very much, Mr. Chairman. I just wanted to ask one question before we left of Mr. Tonko. The regional transmission line that is being proposed for New York, the so-called New York regional interconnect, it is not really regional. It is entirely within the State of New York. You have been personally involved in these energy issues for a long time, and I know you know them very well. Can you describe the New York review process for these transmission review facilities and how that process would conflict with the 1-year arbitrary limitation in section 1221 of this energy law? Mr. Tonko. Sure. Basically, we allow for intervener activities. There are funds that are set aside for that. There is a process that is conducted by our own regulatory group that will review comments made by the applicant. I don't think that the pressures of a 1-year framework are very helpful. When we looked at that whole system, as was asked by Congressman Arcuri earlier, it is obviously looking at impacts that will befall not only the various communities, the economy, the environment, but also looking at the outcomes in terms of what ratepayer impact there would be. Again, to put that into the context of a bigger picture, which is the strategy within New York State, all of those aspects are looked at. What is troublesome here is we might have activity spurred by deal brokering which may empower the applicant to forego this process or not--will have the local regulator feel as though they are at risk or threatened by this process, because there is always an outcome whereby they can circumvent our process and move to a Federal decisionmaker, which I think would be disruptive. In many cases our process, Mr. Chair, is longer than 1 year. Mr. Kucinich. Mr. Hinchey, we are going to come back for another round of questions right after we return from votes, so the committee is in recess for approximately 45 minutes, and we will look forward to another round of questions. Thank you. [Recess.] Mr. Kucinich. The committee will come to order. We will go to Mr. Davis. Mr. Davis of Virginia. Thank you. Mr. Koonce, I just have a couple other questions. In your testimony you mentioned the 2005 EPAct established reliability standards and that these standards are backed with substantial penal authority. Mr. Koonce. Yes. Mr. Davis of Virginia. Can you elaborate on these standards and how Virginia is faring in relation to them? Mr. Koonce. Yes, Congressman. First off, we have always operated our electric transmission system as if the standards were mandatory, even when they were voluntary prior to the Energy Policy Act, so we have always done the planning and done the operations of our system with that in mind. So, as a result of the Energy Policy Act and these reliability standards now being mandatory, we see effectively no change to our operations. We are compliant. We were compliant. So this move is one that we certainly welcome. In terms of the substantial penalty authority, the $1 million per day tight fine, the most egregious tight fine, are fines associated with operating your system in a manner that could put its system and the neighboring systems in a blackout condition. That is obviously the most egregious. The other is the planning criteria that you use to plan for adequate reliability. Those are the two areas where there is the greatest potential for the largest fine. Mr. Davis of Virginia. OK. Mr. Miller, let me just get in with you and Mr. Koonce for a minute on the demand side management. In my opening testimony we talked about demand side management. That is an important part of the equation. Could you give us your vision, and then, Mr. Koonce, hear your vision on how we are dealing with this, because transmission authority is important, but that shouldn't be the only part of the equation, and I think under the law it is not. Mr. Miller. Well, I think generation, as well, could be a third leg of the stool. Mr. Davis of Virginia. Right. Mr. Miller. We have actually commissioned a study by Summit Blue of what opportunities exist in Virginia, and we asked them to look at Virginia and then a broader region, which is actually the service territory for PGM, which is Virginia, D.C., and Maryland. What they concluded is that there was so much low-hanging fruit in all three jurisdictions in terms of readily available investments that could be made to reduce demand and to do better load management that achieving 10 percent of reductions in that large area, which is over 3,000 megawatts, was achievable in a very short timeframe. I think that was the reason that we asked the General Assembly to consider and the Governor to make amendments to the re-regulation bill in Virginia so that the goal of a 10 to 15 percent reduction within a very short period of time would be a statutory goal and included in the SEC's decisionmaking structure. Dominion actually opposed that amendment and offered, I think, much softer language that makes it sort of a study of whether it is possible, as opposed to a mandate. The second part of this is that these things can be done quite quickly. We have talked to Chairman Connelly in Fairfax County about, you know, what it would take to get 10 light bulbs changed at every residence in Fairfax County. That could have the effect of something on the order of 750 megawatts of demand reduction simply by changing lightbulbs. There are so many people there, there is so little that has been done previously, that in a matter of months you could reduce demand during peak hour by changing light bulbs. Mr. Davis of Virginia. Changing light bulbs? Seriously, I keep hearing that. Mr. Miller. But you have to do it in bulk. If we all change one, that isn't going to get us there, but if we all change 10, which is good economics, we could get there. Let me give you the math. Each light bulb that you change from 100 watt incandescent to a 23 watt compact fluorescent saves 75 watts. You multiply that by Dominion's 1.1 million customers in northern Virginia and you have 75 megawatts. You multiply that by 10 and it is 750 megawatts. Now, is that all at peak hour? That might be debatable, but it is still a real savings. The investment that would be required to do that is about $10 million, $1 a light bulb. For $10 million we could reduce demand by 750 megawatts, but instead we are going to look at a $250 million power line that will take 4 years to build. I just think that the opportunities in northern Virginia, throughout the region that is served by these proposals are so real and so under-developed that we have to look at them. Another one that is very important, another one where Dominion is falling short, is A/C cycling, air conditioning cycling. By comparison, NOVEC, which acts in the 11th District, has an aggressive program of encouraging customers to use A/C cycling. A third of their customers have had A/C cycling devices installed that allows the utility to switch off the compressor 7 minutes out of every half hour during the peak demand period, thereby reducing demand by nearly a third in most critical components. That service is not available from Dominion. Mr. Davis of Virginia. Thank you. Mr. Koonce, do you want to respond? Mr. Koonce. Yes, Congressman. We do think that it is a combination of transmission, generation, and energy conservation. All should play an equal part in providing for reliable infrastructure going forward. On the day that we filed the application for this transmission line, we also filed an application to install 300 megawatts of clean natural gas peaking capacity in the region to support the region's continued growth. We also intend to work very closely with the State Corporation Commission, as has been called for by the recently enacted law, to identify all the measures that we can employ in order to conserve energy and to employ demand side management techniques. We currently have about 314 megawatts under demand side management programs. We have about 17,000 customers using time of use rates. We sell about 4 million megawatt hours under those time of use rates. But we are anxious to do more, and we think that the legislation that has been enacted that really required we stay on the sidelines and let retail merchants provide these services, we don't think that has worked, and we are anxious to work with the State Corporation Commission, with the Piedmont Environmental Council to identify those programs and put those programs in place. Mr. Davis of Virginia. Finally, let me ask about new generation. You have a North Anna plant that will be coming on in, what, 10 years; 5 years? Mr. Koonce. We are currently working on securing an early site permit for the North Anna plant. That is correct. Mr. Davis of Virginia. What will that mean to ability to deliver generation to the region? You will still have to transmit it? Mr. Koonce. No question. The discussion around North Anna, could be a plant as great as 1,500 megawatts. To unload a 1,500 megawatt plant, unload it, and get the power to where it is needed will require some investment in infrastructure. We have looked at that. We think it is modest. But certainly when you build generation you have to also be prepared to construct the transmission to move that power to market. Mr. Davis of Virginia. OK. Thank you. Mr. Miller. Mr. Chairman. Mr. Davis of Virginia. Did you want to respond to that? Mr. Miller. Yes. I think there is some new facts that have also affected generation. The ruling that the Mirant plant can continue operations, both as a regulatory issue and as a land use issue, actually changes the scenario that these projects are being analyzed against. The assumption of PGM is that Mirant would be retired. There are other proposals for generation starting to move through the process. I think all those kinds of things have to be taken into account. Our concern always with this process so far is it is not clear how the Department of Energy is looking at the three, you know, major components. The decision on NIET corridors seems to be weighted toward a transmission-only analysis, not a balance of the different factors. Mr. Davis of Virginia. Good point. Thank you. Mr. Kucinich. I thank the gentleman. I would like to followup on a question that I had asked Mr. Koonce earlier. Mr. Koonce, in your earlier responses you seemed pretty proud that Dominion was spending, I think you said, $1.2 billion on NO<INF>X</INF> and SO<INF>X</INF> reduction. For the record, we are talking about a reduction of sulfur dioxide and nitrogen oxides. That is known as NO<INF>X</INF>, sulfur dioxide known as SO<INF>X</INF> for short. Isn't it true that the 1.2 billion you have spent is pursuant to an EPA enforcement action against your company in 2003? Mr. Koonce. Mr. Chairman, the correct number is $1.7 billion, but the question you asked is exactly correct. We did not pursue litigation with EPA. We reached an agreement with EPA to spend the money to improve the air quality in Virginia, and we feel like that has been rewarded by being able to get equipment and manpower in place earlier than many of our competitors who are still litigating in a much more expensive construction market. So yes, we were pursued by EPA. We did reach that agreement, and those expenditures have been made. Mr. Kucinich. All right. I thank the gentleman. Now, just out of curiosity, do you think you would have made that level of investment, in this case $1.2 billion pursuant to a consent agreement that was filed in Federal court, without the enforcement action that was taken? Mr. Koonce. I am not sure how to answer. Mr. Kucinich. You know, I just want to make sure that you have come before this committee and what you are saying is you are trying to be a good corporate citizen, and I think everyone appreciates that, but I also think that it is important for the record that we establish what incentivized you to be a good corporate citizen, and that the incentive was a threat of prosecution for the company violating laws by making major modifications to its power plants without installing equipment to control pollution that causes smog, acid rain, and soot, this according to a release by the Environmental Protection Agency which I am going to put into the record. And I say this not in any way to demean your efforts, but I really think that, as we proceed in this committee's investigation into the dynamics in the marketplace, that it is important for us to be entirely fact based, and at the same time it is absolutely true that the cooperation of Dominion in moving toward more effective efficiencies in the marketplace are mandatory, so that is why your presence here today is so important. But I wouldn't want anybody to leave this hearing with a misimpression as to what was one of the stimulating factors in the transit to a more effective expression of civic responsibility. I just want to express my gratitude to you. Mr. Arcuri. Mr. Arcuri. Thank you, Mr. Chairman. I want to thank the panel again for your patience during our vote. I have a question for the gentlemen from New York and Pennsylvania. I was thinking during the recess about what happens in terms of Federal preeminence to State policy decisions. I asked questions earlier about cost and I asked about trying to promote generation, but my question is this: if the State has a policy of protecting the environment or choosing one idea or one concept over another because it feels that it is environmentally more sound, does the fact that the Federal Government can come in and preempt and change that affect the planning for a State in the future? Mr. Tonko. I think it could. I think it is problematic. I think that, again, usurping States' rights in regard to such important matters and principles that are established is a negative outcome. I think it is very obviously, listening to the exchange here today, that we need to promote the kinds of partnerships amongst States that will enable them to foster the best outcomes for energy consumers. We need not to encourage pollution or taking the easy route, but rather encourage the binding of energy efficiency, which is our country's greatest resource, and allowing for outcomes that have a full continuum, a complement of activities going on that will express respect for the environment and strong energy outcomes for all categories of ratepayers. I think that, indeed, is important. Earlier we were asked about the heavy hand coming in if States don't do their thing or compacts if States don't do their thing. That is one approach. I think the better approach is to provide incentives for us to burn clean, to reduce carbon dioxide emissions, and to encourage efficiency. Building those incentives, rather than going to the extreme where you usurp State rights and perhaps deny them public policy, that should be their given opportunity and responsibility. Mr. DeWeese. It would be pretty difficult for me to amplify or burnish the remarks of the Honorable Energy Committee chairman from the Empire State. Mr. Arcuri. How about with respect to populations? I mean, if the State of Pennsylvania wanted to choose one route for a power line or, for instance, to bury a power line or to put it in a place where less people live, would the fact that the Federal Government can then come in and preempt and change that route affect Pennsylvania's ability to plan for the future? Mr. DeWeese. Yes, sir. No doubt about it. And if you check the map of Pennsylvania, the northern tier counties that abut New York State, which are in white--they are not even delineated with county lines because they are not involved in this discussion today--are very sparsely populated. In fact, most of the middle counties are sparsely populated. To invoke, although metaphorically, of course, that famous line from James Carvel, ``Pennsylvania is Philadelphia and Pittsburgh and Alabama in the middle,'' well, I think he was talking politically. I am going to talk population-wise. Most of our population is based in the southwest and the southeast, so the Pennsylvania Public Utility Commission I think could make much better decisions than, again, having the long arm of the Federal Government, FERC, Federal Energy Regulatory Commission, come in to the Keystone State and make these decisions for us. Mr. Arcuri. Mr. Tonko, would that apply to New York, as well? Mr. Tonko. Absolutely. You know, a lot of discussion today was focused on the NYRI line. That is a line that was proposed totally internal to New York State. There is no impact on other States. That tells me that the decision should rest with our State. We should be able to incorporate the logic, the thinking on the impact on rates, on economic recovery, for regional economies in our State. This is, I think, an overuse of power that just does not spell good public policy. Mr. Arcuri. In effect, the energy is for the most part produced in New York, run through New York, and consumed in New York---- Mr. Tonko. Exactly. Mr. Arcuri [continuing]. Yet the Federal Government can come in and tell New York how to run its lines? Mr. Tonko. Right. I think it is wrong. Again, to repeat myself, there are better things that you can provide to the energy outcomes and to the environment outcomes of Americans by doing those incentives that encourage the addressing of reducing emissions of carbon dioxide and encouraging efficiency. Mr. Arcuri. Do you agree with that? Mr. DeWeese. The Greek philosopher Plato said that repetition is the first law of learning. I want to repeat one more time, apropos of your question, I believe that clean coal technology now and clean coal technology in the next 2, 4, 6, 8 years will be such that we could construct power plants further toward the coast without as much challenge of air pollution, and Pennsylvania Coal, Ohio Coal, Kentucky Coal, Union Railroad workers, and so forth, would be favorably impacted. I don't think we need this big power line, and I think we can still have very, very beneficent impacts culturally, historically, economically, socially, and with the production of energy. I think, again, I represent coal miners and coal mining, and I really believe that we can build these power plants further east and still not suffer negative consequences. Mr. Arcuri. Chairman Adams, do you agree that the Federal Government should stay out of intrastate shipping of power, movement of power? Mr. Adams. You know, it is an interesting question because it is so foreign to New England context, but I am intrigued by that very question. The issue that you are grappling with on what a State ought to do is one piece of it that is extraordinary to me that is lost in the shuffle that I think my colleagues from the States understand, and that is, when you are studying a transmission line you spend a lot of time with neighbors talking about where the line ought to go. Should it go behind Oak Street or behind Pine Street? Maybe you put it under that river, and maybe you put it there. It is a long, painful, excruciating process for the utility, and it is supposed to be, because that is how a utility's business is supposed to work. If you move that forum out of the State regulatory bureau, you let PUCs off the hook. If we don't have to make a decision and we can't, we won't. Regulatory authorities like ours won't go down and sit with the communities and angry residents and make the difficult decisions. They won't go and stand up and do what we are supposed to do what we are paid by our ratepayers to do. We will pass the buck to the Federal Energy Regulatory Commission and those citizens will have a heck of a time making their interests known between Elm Street and Oak Street in Washington, DC. It is a profoundly important issue for just about every State. Mr. Arcuri. Thank you. Mr. Kucinich. The gentleman's time has expired. Mr. Arcuri. Thank you, sir. Mr. Kucinich. The Chair recognizes Mr. Waxman. Mr. Waxman. Thank you, Mr. Chairman. I thank all the witnesses for their testimony. I am sorry that scheduling conflicts prevented me from being here throughout the whole presentation, but I do want to ask some questions. I indicated in my opening comments that I was involved in the legislative process that developed the Energy Policy Act of 2005. I identified many of the problems we have heard about today. In fact, I released a report in July 2005, that highlighted the problems this bill would pose for the States. Unfortunately, the House Republican leadership at the time just wasn't interested in addressing the problems. Frankly, section 1221 was included in the bill over my objections. It was one of the reasons I opposed the bill. Proponents of this provision dubbed it the back stop provision. The idea was that if States were unreasonably delaying the siting of a new transmission line, there would be a Federal backstop to ensure that needed infrastructure was able to be constructed on time. Chairman Tonko, I would like to ask you about this. Under section 1221, if a proponent of a transmission line doesn't serve end users within a State, the proponent can bypass the State altogether. Does that sound like a backstop against unreasonable delays? Mr. Tonko. I think it is interesting nomenclature, but basically it is preempting the powers of individual States which need to be able to work within the context of their own State and get things done. I think it is going to be very difficult to broker some of the outcomes if they know that there is a way to circumvent that process, as just was alluded to by Chairman Adams. Mr. Waxman. Yes. Mr. Tonko. I think that when you have that given obstacle in the path of this process, it produces strong challenges for any State. As was mentioned earlier today, some of these lines proposed, their impact is totally within defined territory of States, so they need to have that power, they need to have that decisionmaking process, and no sort of threats to them that eventually someone could opt out to another decisionmaker that will be doing that in a vacuum. And FERC would be doing that decisionmaking in a far more greater vacuum. I also think that comprehensive plans are important here and they need to be implemented and we need to give States that authority and that ability. I think that comprehensive quality is important to look at all these elements of energy policy that will help reduce cost or reduce pollution or reduce dependency on fossil-based fuels. Mr. Waxman. Talking about proposals that are completely within a State, New York is considering a proposal for a line that is nearly 200 miles in length, and this would essentially be a new permanent feature through the heart of the State. I assume there are many issues to address. Do you think that having 1 year as section 1221 provides a State to deal with the project is a reasonable thing for the State to do? Mr. Tonko. I think the timeframe of 1 year is troublesome and problematic. Mr. Waxman. Yes. Mr. Tonko. I think that certainly some projects have been resolved within the confines of 1 year. Some haven't. I think the flexibility is important, and I think that also there is that murkiness of when the clock really begins ticking. I think the definition of that timeframe is not solid enough, and 1 year limiting something that may be a good line--there are transmission lines that States may want to incorporate, and if they are lost in the process because of this artificial restriction that is imposed in the process, that is not helpful. Mr. Waxman. So it is your view that this is not really a back stop authority. That is more rhetoric than reality. What it is is trumping the authority of the State and giving the energy companies the upper hand because they can go right to the Feds after the State? Mr. Tonko. Right. Well, earlier I was asked if the Feds should step in if States or an individual State does not do its right thing, does not put together the good energy outcome. There are far better things to do--encourage partnership among States, enabling people to address those seams between ISOs, perhaps providing resources for switching technology that will allow the avoidance of some of the outcomes of the Ohio/New York experience of 2003. There are many things that can be done. Try the incentives for cleaning up pollution out there or providing incentives for energy efficiency, but don't bring in the heavy hand that can disrupt the thought process and the planning process that is driven by a State or a compilation of States that should be their opportunity. I find it troublesome that we would have that happen. Mr. Waxman. Thank you very much. Mr. Adams, do you agree with those comments? Mr. Adams. I absolutely do. To his point, one of the most fascinating issues to me as an economic regulator about this whole area of law is DOE has really punted on the question of who pays, the economic relationship between building a transmission line and the cost to certain consumers on a variety of different respects and the incentives that develops. As the issues start moving forward, the idea of planning and getting economic signals right to create incentives is completely lost in the middle to build transmission lines. It seems to me that the economic incentives ought to be driving what gets built, as opposed to building what we can. Mr. Waxman. Thank you. Thank you, Mr. Chairman. Mr. Kucinich. I thank the gentleman. I yield myself 5 minutes. The question that arises here that is a result of some of the colloquy I had earlier, should the Feds step in in the event of disputes within a State or between the States, I don't know if that is the right question, because I think the question which gives rise to this committee meeting is: should the utilities have such a broad reach into planning and siting and basically setting energy policy without consulting with the States, because what this section of the law did, essentially, I think, in reading it, was to go a long way toward nullifying the States' abilities to be able to enter into the decisionmaking process because, in effect, what 1221 does is it trumps a lot of States' powers. I don't know if any States' attorneys general have filed any action to raise questions relative to this, but, you know, absent a congressional remedy, there might be some constitutional issues here that haven't been appropriately addressed. I would like to ask Chairman Tonko and also Representative DeWeese, once the Department of Energy designates a transmission corridor, energy companies can get their projects approved by the Federal Government at the level of the Federal Energy Regulatory Commission. Since we have State legislators with us, I would like to explore the wisdom of this policy and how it might affect States. Representative DeWeese, in your testimony you stated that Pennsylvania's agricultural land preservation program had preserved over 300,000 acres of farmland in 53 counties. Do you have any reason to think that the Federal Energy Regulatory Commission here in Washington, DC, understands the nuances of Pennsylvania's farmland preservation policies? Mr. DeWeese. No, sir, Mr. Chairman, I do not, and I think that the sharing that my colleague from Maine offered 10 or 15 minutes ago to me was the most telling aspect of today's hearing. I believe it was Congressman Murphy from Connecticut who said that after repeated supplications FERC refused to go up to Connecticut for a hearing. If that is their degree of casuality and nonchalance when the U.S. Congressmen and others are asking them to make a visit and to explicate their policy, I think they would be comparatively cavalier and disregard those of us who are trying to alter the power line for Allegheny Energy in Pennsylvania. I think that the farmland preservation dynamic apropos of your question specifically would be on the far periphery, if available for their thought process at all. Mr. Kucinich. Thank you. Thank you very much. Chairman Tonko, the administration has taken a very different approach to global climate change than New York. For example, New York and other States sued the EPA for denying a petition to regulate greenhouse gases. Mr. Tonko. Yes. Mr. Kucinich. Obviously, the States just won in the Supreme Court and the White House lost. Do you see any reason to believe that the Federal Energy Regulatory Commission is committed to seeing New York's greenhouse gas reduction program succeed? Mr. Tonko. Not really. I think this whole approach really denies or delays progressive thinking, a new realm of thinking in the energy policy area. It is taking us back into the same old traditions, the status quo, and I think this country is sadly in need of progressive energy policy, and the way to do it is to, again, have a full complement of responses in a comprehensive energy strategy, in a planning concept, and this disrupts that opportunity to implement that planning. I think it is wrong, I think it is hurtful, it is harmful, and it certainly holds back on a progressive, proactive order of policy creation and implementation. Mr. Kucinich. Thank you very much. To Ms. Merritt, why is Section 106 of the National Historic Preservation Act important to corridor designation? Can you explain that for members of the committee? Ms. Merritt. Well, section 106, like NEPA, would provide a mechanism for looking at alternatives that could be less harmful to historic properties. And, like NEPA, it can be implemented programmatically by looking broadly at the kinds of resources that could be harmed. But if it is done after the fact, after corridor designation is also completed, then the options for minimizing or avoiding harm to historic resources are extremely limited, and, because of the magnitude of the infrastructure involved in these projects, very little can be done at that point to try to mitigate harm to historic properties. Mr. Kucinich. So is it your understanding that the Department of Energy doesn't want to take into account historic resources before designating transmission corridors? Ms. Merritt. They have made no indication that they intend to comply with section 106 prior to designating new corridors. Mr. Kucinich. Is there a public policy rationale for that? Ms. Merritt. Well, it is our understanding that they intend to comply with section 106 after the corridors are designated, but at that point our view is that meaningful alternatives will be foreclosed. Mr. Kucinich. Well, we are going to look forward to hearing from the Department of Energy in the next panel. We have come to the time where we have asked sufficient questions of the members of the panel. I would just like, because of the importance that each member of this panel has, I would like to give you approximately 1 minute, if you want to make a final statement before you leave. If you don't want to, that is OK. Chairman. Mr. Tonko. So many things have been said here today, and I have repeated myself a few times only because of the importance of the message. But where the Feds do not provide for progressive orders of thinking, let the States or compacted States be those laboratories of change. Let them exercise their rights to really bring about sound energy policy, environmental policy that will allow us now to come to a new realm of thinking that will help us revitalize the regional economies of so many areas of this country. Mr. Kucinich. Representative DeWeese. Mr. DeWeese. Very succinctly, sir, I would just say that 1221, the most malignant section of that act of 2005, be eliminated by congressional action, and that we return the power of the States to the States. I believe that is an ethos that both Republicans and Democrats can embrace prospectively, notwithstanding this temporary mischief. This is a wrong-headed, rickety 2005 action by the Congress, and my polite admonition would be that you change it, sir. Thank you. Mr. Kucinich. Thank you. Mr. Adams. Mr. Adams. Thank you. Maine is a potential site for over 1,000 megawatts of new generation. In a non-CO<INF>2</INF> environment that we are heading into for generation, Maine is potentially the Saudi Arabia of New England for the purposes of non-CO<INF>2</INF> generation. The problem with this particular statute is, if preemption is forced in a way that is not consistent with Maine's interests, Maine does not have an incentive to site that generation that New England needs to help reduce CO<INF>2</INF> emissions. I would look forward to watching your deliberations carefully. Mr. Kucinich. Thank you very much. Ms. Merritt. Ms. Merritt. I would just like to echo the concerns expressed by the other panel members of the importance of making changes to section 1221. You have heard a lot about the problems with the law as it is written now, and it has really got to be addressed. Mr. Kucinich. Mr. Koonce. Mr. Koonce. Mr. Chairman, I appreciate having the opportunity to participate in this discussion. I recognize that my views are in the minority, but I appreciate the way I have been treated today and I appreciate being here. Thank you. Mr. Kucinich. You are welcome, Mr. Koonce. And I want to say that we could not have this hearing without you, because we really need to get all of the elements in this discussion, and we are going to continue to want to engage you and other people in the industry. We appreciate it. Mr. Miller. Mr. Miller. One thing I would like to add is that, you know, the act as it is currently constituted does recognize that there are certain lands that really deserve permanent protection, the national park system and the national wildlife refuge, land that is acquired with Federal dollars through the Land and Water Conservation Fund. Unfortunately, what that ignores is that east of the Mississippi the way that we have pursued land conservation and protection of national priorities, be they battlefields, be they historic sites, is through public-private partnerships, and those are conservation easements. Private individuals, State government, and Federal Government has invested billions of dollars into trying to get those lands preserved, and this act would disregard all of those actions and allow for Federal condemnation of those very values. That has to be changed. Mr. Kucinich. I appreciate that very much. We have concluded our first panel. This is the Subcommittee on Domestic Policy, Committee on Oversight and Government Reform. This is a hearing on Federal electric transmission corridors. I am Congressman Kucinich, the chairman of the committee. We are pleased to have with us the ranking Republican on the full committee, Mr. Davis, as well as our colleague, Mr. Arcuri. I want to thank all members of the panel for being here. We are going to be continuing this discussion. We will look forward to all of you presenting any ideas that you have about more effective energy policies, and also ideas with respect to 1221. Thank you, and the first panel is dismissed. We will move immediately to the gentleman who constitutes the second panel. We are going to have to move right to the second panel here because of the business of the committee. If anyone has any other business inside the room, I would ask that you take it outside, because we do want to proceed. Our next witness will be Kevin Kolevar. He is the Director of the Office of Electricity Delivery and Energy Reliability for the U.S. Department of Energy, and he will testify at this hearing on Federal electric transmission corridors, consequences for public and private property. I want to welcome Mr. Kolevar. I would ask that you stand. [Witness sworn.] Mr. Kucinich. Let the record show that the witness has been duly sworn and has answered in the affirmative. Welcome. Please proceed. STATEMENT OF KEVIN KOLEVAR, DIRECTOR, OFFICE OF ELECTRICITY DELIVERY AND ENERGY RELIABILITY, DEPARTMENT OF ENERGY Mr. Kolevar. Thank you, Mr. Chairman, Ranking Member Davis, members of the committee, for the opportunity to testify before you today on the Department of Energy's statutory authority under section 1221(a) of the Energy Policy Act of 2005 regarding national interest electric transmission corridors. Today the availability of and access to electricity is something that most Americans take for granted, even though it is vital to nearly every aspect of our lives. As our Nation's economy continues to grow, consumers' demand for more electricity will steadily increase. In fact, even when accounting for advances in energy efficiency, the Energy Information Administration estimates that by the year 2030 U.S. electricity consumption will increase by 43 percent from the 2005 level. Our future electricity needs will only be met through a combination of options, such as new generation, transmission, advanced technologies, demand response programs, and improved efficiency. That said, perhaps the greatest challenge will be developing the appropriate network of wires and other facilities to reliably and responsibly deliver electricity. The Office of Electricity Delivery and Energy Reliability was assigned the responsibility of executing many of the provisions in title 12 of EPAct. Specifically, EPAct amended the Federal Power Act by adding a new section, 216(a). The act now required that ``not later than 1 year after the date of enactment of this section, and every 3 years thereafter, the Secretary of Energy, in consultation with affected States, shall conduct a study of electric transmission congestion.'' In accordance with that law, Mr. Chairman, on August 8, 2006, DOE published the first National Electric Transmission Congestion Study. During the development of the study, the Department provided numerous opportunities for discussion and comments by States, regional planning organizations, industry, and the general public, as required by section 216(a). Outreach included conference calls with States to request suggestions and relevant information, notice of inquiry explaining the Department's intended approach for the study and inviting comment, and a public technical conference to address the questions presented in the notice of inquiry. In addition to these efforts, the Department held numerous meetings with State officials and participated in regional conferences across the Nation. The congestion study defines congestion as the condition that occurs when transmission capacity is not sufficient to enable safe delivery of all scheduled or desired wholesale electricity transfers simultaneously. In analyzing transmission congestion, the Department identified congestion and other related concerns through two approaches: first, the Department conducted a thorough review of recent reliability studies and transmission expansion plans conducted by regional reliability councils, regional transmission organizations, independent system operators, and sub-regional transmission planning groups. Altogether, the Department reviewed 65 studies and related documents for the eastern interconnection and 38 for the western interconnection. Second, DOE developed projections for both the eastern and western interconnections using industry transmission planning models. Based on this data, the congestion study identifies existing, projected, and potential congestion and reliability problems in different parts of the country. The first category, critical congestion areas, is comprised of two large, economically vital, and heavily populated areas that have widespread existing or potentially severe congestion. These two geographic regions are in southern California and the Atlantic coastal area from New York City to northern Virginia. A second group, congestion areas of concern, consists of four areas where a large-scale congestion problem exists or may be emerging but that aren't as critical or longstanding. And the third area, conditional congestion areas, consists of areas where congestion is not acute at present but where congestion would become so if large amounts of new electric generation were to be built without associated transmission capacity. The Department invited and received over 400 public comments on the findings of the congestion study and has posted all of the comments it has received on its Web site. Section 216(a) also requires that ``after considering alternatives and recommendations from interested parties, including an opportunity for comment from affected States, the Secretary shall issue a report based on the study which may designate any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor. However, prior to issuing a report that designates any national corridor, the Department will first issue a draft designation to allow affected States, regional entities, and the general public additional opportunities for review and comment.'' Following an appropriate comment period on a draft designation, the Department would decide whether the designation of a corridor is, in fact, warranted. The Secretary is expected to release his decision with respect to draft national corridor designations very soon. With the enactment of section 216(a), Congress gave the Federal Government the new responsibility of identifying electric congestion and its causes. The Department takes this new rule seriously, and we will execute the letter and the spirit of the law conscientiously with the Nation's best interest in mind. This concludes my statement, Mr. Chairman. I look forward to answering any of your questions and those of your colleagues. [The prepared statement of Mr. Kolevar follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] Mr. Kucinich. The Chair recognizes Mr. Davis. Mr. Davis of Virginia. Thank you. Do you think that section 1221 of the EPAct weakens the power of the States over the authorization of transmission lines? Mr. Kolevar. I don't believe it weakens the power of the States. It does present another opportunity for application to be made to the FERC should a company not be able to reach agreement with a State on a proposed transmission route. Siting has long been the province of the States. That doesn't change by virtue of section 216(a) of the Federal Power Act. It does provide one more opportunity for another entity to hear arguments in favor of building new transmission. Mr. Davis of Virginia. I wonder if, in fact, what happens to an elected public service commission, whether it be elected or something, whether at this point they can't more easily go the populist route, reject it, knowing there is a backup, and let FERC make the decision. Mr. Kolevar. That is a legitimate argument, and I know the first panel made comment to that. I have heard both sides of that. I have heard a number of commissioners that insist they will do their job, they will do the job that they were elected to do. I am of the view that is the way that most of these situations will be handled. Is it possible that there are situations where some commissioners wash their hands of it and just decide that they are going to say ``no'' but, wink-wink, there is an understanding it will go up to the FERC for consideration. Mr. Davis of Virginia. I guess we will find out. Mr. Kolevar. I can't predict whether that will happen. Mr. Davis of Virginia. Let me ask you this. Since this is new for FERC, since we are just getting established, in fact, we are just getting the probable lines established later this week, what do you foresee, what circumstances would you foresee FERC considering an application from a utility after they have applied at the State level? Would they have to exhaust all their appeals at the State level first? Mr. Kolevar. Right. Mr. Davis of Virginia. And once the issue is raised to FERC level, would the utility then be able to disregard State laws such as consideration of wetlands, historic sites, and so on, or do you think the FERC would take those into account? Mr. Kolevar. This is a very important point, Congressman. And I do appreciate the opportunity to testify on this, because there are, in my opinion, a number of misperceptions with respect to section 216(a) that ought to be addressed. To your point, section 216(a) in no way allows a scenario by which the FERC would be able to permit a line and through permit of that line have the authorities of imminent domain conveyed to any federally owned lands, to any State owned lands. That means Federal parks, that means State parks, for example, that means schools, to the extent that some schools are owned by State lands. But the FERC authorities with respect to Federal imminent domain are very limited and, of course, in addition to those limitations, they are only empowered when considering application within a national corridor. It is worth noting that State unions with respect to imminent domain are much more robust. A State can route a line through a State-owned park if it chooses. A State could run a line through a school yard if it so chooses. There are good reasons for doing neither. My opinion is that federally elected officials, Federal Governmental officials appreciate the reasons for not doing something in a sensitive area for the very reasons that a State official would. It is also the case that there are a number of permits that will, in all situations, have to be received by an applicant prior to ultimate permission of a line, notwithstanding a FERC decision to permit a line. By way of example, the very same authorities that we are talking about here--that is, FERC authority to allow for imminent domain on transmission lines-- this is precisely the very same authority that FERC enjoys today with respect to certificating natural gas lines, and FERC has enjoyed this authority since section 7 of the Natural Gas Act was passed in 1938, 69 years. There was significant precedent for this kind of action. Mr. Davis of Virginia. So you think that precedent could-- -- Mr. Kolevar. It will, sir. Not to filibuster your time. To get to the point of that, notwithstanding a FERC permit for a line to go through, the permitee will still be required to secure, where applicable, permits for section 404, when proposing to cross wetlands, permits from State agencies that administer the Clean Water Act---- Mr. Davis of Virginia. How about historic sites? Mr. Kolevar [continuing]. The Clean Air Act, and Coastal Zone Management Act. Mr. Davis of Virginia. How about historic sites? Mr. Kolevar. I will report back on historic sites, because I am not aware of---- Mr. Kucinich. Without objection, the committee would like to enlist your report. Mr. Kolevar. Yes, sir, I will respond. Mr. Davis of Virginia. Finally, just a quick question, the NIET corridors that are going to be, we think, coming out maybe this week, do you have any idea what they are going to be? Are they going to be very general? How specific will they be? Any thoughts on that? Mr. Kolevar. They are coming out very soon, and the Secretary has not announced his decision and I cannot---- Mr. Davis of Virginia. You wouldn't want to scoop him on that, would you? Mr. Kolevar. No, sir. Mr. Davis of Virginia. OK. Give us an exclusive here? OK. Thank you. Mr. Kucinich. I thank the gentleman. I just want to followup on that. The pending proposals for early designation cover an expansive territory. They propose corridors in New York, New Jersey, Pennsylvania, Virginia, Louisiana, Oklahoma, California, North Carolina, Ohio, West Virginia, Maryland. That is about right, isn't it? Mr. Kolevar. Yes, 10 or 11. Mr. Kucinich. OK. When will the Department act on these requests for early designation? Mr. Kolevar. The Department has already indicated that it would not act on those requests. If I could take a moment, sir, to give the background so that you understand the context behind that---- Mr. Kucinich. I understand the context. What I want to know, though, is that, I am sure you know, these proposed transmission corridors are causing an uproar. Mr. Kolevar. Yes, sir. Mr. Kucinich. We have received testimony that the administration has refused to share the data it is using to determine transmission congestion. What I want to know, can you commit today that the Department will address all the concerns you have heard today prior to designating any transmission corridor? Mr. Kolevar. I think yes, sir, I will, and the reason we will do that is precisely because the Department has taken an extra step and inserted an extra step into this process that we were not bound to by virtue of the statute. In November of last year the Department announced that prior to any final designation, that should the Secretary decide to move forward on designations, the next release would be a draft. I have indicated that action by the Secretary is imminent. That action will be with respect to draft national corridors. When that happens, a 60 day comment period will go into effect and this agency will work aggressively to seek consultation with all affected parties, and so there will be opportunities for all interested parties, certainly all affected parties, to present their point of view and opinions and recommendations to the Department. Mr. Kucinich. I thank the gentleman. With unanimous consent, I would introduce into the record the testimony of National Parks Conservation Association and the testimony of the National Association of State Utility Consumer Advocates, without objection. Final question to Mr. Arcuri. Mr. Arcuri. Thank you, Mr. Chairman. Thank you, sir, for being here. I will move quickly. We don't have a lot of time left. You indicated that the purpose of 1221 was to ease congestion, and you talked about areas like New York and Los Angeles. I take it areas like Chicago, Houston, Dallas, Denver are areas of congestion that the Department of Energy is concerned with? Mr. Kolevar. Yes, sir. Mr. Arcuri. All right. And does the potential for the creation of energy corridors exist throughout the country? Mr. Kolevar. Well, the Department has to come back every 3 years and update the study, so---- Mr. Arcuri. My question is, do they exist universally throughout the country, the continental United States? Mr. Kolevar. Congestion? Mr. Arcuri. No, the ability to create the corridors. Are there any places that are exempt? Mr. Kolevar. That authority would convey upon a report that found congestion and constraints causing congestion---- Mr. Arcuri. Well, if there was congestion found in Houston or Dallas, would the FERC corridor be allowed to run a corridor through the State of Texas? Mr. Kolevar. Oh, I see your point. No, sir. That is not covered by this. Mr. Arcuri. It has been exempted out, the State of Texas; is that correct? Mr. Kolevar. It sure has. Mr. Arcuri. All right. And do you know why the State of Texas has exempted out? Mr. Kolevar. No, sir, I don't. Mr. Arcuri. OK. So basically what happens to the citizens in New York, the Federal Government feels that the Department of Energy can make the decisions for the people of New York but not for the people of Texas? Mr. Kolevar. Congressman, I am bound to act within the confines of the statute. This is the way that the Congress put the statute into effect. Mr. Arcuri. I take it that the only time you can put a corridor in is when there is a demonstrated need? Mr. Kolevar. When there is a finding of congestion and/or constraints causing congestion. Mr. Arcuri. Who determines when that need is demonstrated? Mr. Kolevar. The Department, through virtue of the congestion study. Mr. Arcuri. What if an area like New York City is in need of power? Who determines where the corridor should be located to meet that need? Is it a private company that stands to reap a hefty profit, or would it be placed in a place where it was most convenient for the citizens? Mr. Kolevar. To be clear, are you talking about a line that is---- Mr. Arcuri. A corridor. Mr. Kolevar. OK, because a corridor is defined in the statute as a geographic region. Mr. Arcuri. Who decides where to put the corridor? Mr. Kolevar. The Department of Energy after appropriate consultation and public input. Mr. Arcuri. And would they look into the fact that there would be a private company that would want to run a line in a particular area? Mr. Kolevar. No. Mr. Arcuri. They would not? Mr. Kolevar. No. Mr. Arcuri. That would not be in their consideration if a private company had a plan already in place to run a line in a particular area? Mr. Kolevar. No, it is not part of the criteria that we are bound to consider in making a needs determination and identifying a problem. Mr. Arcuri. Thank you, sir. Mr. Kucinich. I want to thank the gentleman. Thank you very much. Thank you very much. I want to thank the witness for his patience. The committee members may have some followup questions they will submit in writing. This has been a hearing of the Domestic Policy Subcommittee of the Oversight and Government Reform Committee. It has been a hearing on the national interest electric transaction corridors. I want to thank all those who have participated. I am Dennis Kucinich, Chair of the committee, and the committee stands adjourned. Thank you. [Whereupon, at 5:45 p.m., the subcommittee was adjourned.] [The prepared statement of Hon. Elijah E. Cummings and additional information submitted for the hearing record follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] <all>