QER Draws Praise, Fire in Senate Hearing

The Obama administration's first installment in the Quadrennial Energy Review (QER) drew a variety of responses in its first public hearing before the Senate Energy and Natural Resources Committee on April 28.

Chairman Lisa A. Murkowski (R-Alaska) opened the hearing with a nod to the still-in-limbo Keystone XL pipeline. She noted that though the QER calls for new spending in a variety of areas, "federal spending is not all that matters. So do regulations-particularly those that hold back projects and private investments. We have to keep that in mind as we seek to find a better balance."

Energy Secretary Ernest Moniz was the lone witness. He began by describing the background of the QER, which was a collaborative effort between 22 federal agencies. The QER, released on April 21, "provides a roadmap for reaching our energy objectives."

He also highlighted a few of the recommendations in his opening statement, such as a competitive program of targeted funding to accelerate pipeline modernization and replacement, as well as state infrastructure modernization programs. He acknowledged that these would require "a bipartisan commitment to modernize the nation's energy infrastructure."

Permitting Challenges

Much of the questioning concerned petroleum issues, but in addition to discussions of crude-by-rail and oil exports, Moniz was pressed on permitting for interstate transmission lines and pipelines.

Sen. Cory Gardner (R-Colo.) asked about frequent lengthy delays in getting such lines built. Moniz said that the QER has a range of recommendations for streamlining, but "it's also clear there are a lot of obstacles left." He noted that Congress is looking into this issue already, and "we are happy to look at" further proposals.

Sen. Joe Manchin (D-W.Va.) pressed Moniz repeatedly on the effects of accelerated coal retirements and questioned whether the nation has enough natural gas pipeline capacity to replace lost coal generation in all areas. Moniz responded that though the QER concluded a major build-out was not necessary, regional challenges would exist. He also suggested that a modern ultrasupercritical coal plant with carbon capture could fit into the administration's climate goals.

Sen. John Barrasso (R-Wyo.) questioned whether the QER adequately addressed the need for permitting reform, in that it does not mention deadlines or eliminating duplicative processes. Moniz responded that the nearly constant litigation during permitting processes is a larger concern, and, especially with large interstate projects where affected states disagree on the outcome, opposition will slow things down. "That's what we are seeing in terms of multiple delays," he said.

Pipeline Constraints

Sen. Angus King (D-Maine) asked about natural gas constraints in New England, pointing to what he called an "appalling" chart in the QER showing price differentials across the country (Figure 1). "This is the infrastructure problem, and I think it's something that is absolutely urgent for our region." He then pressed Moniz on whether the Department of Energy (DOE) would be able to help with the regional discussions on addressing the problem, such as repeated efforts by New England's six governors to reach a consensus.

1. As the shale boom caused gas prices to converge in most of the country, greater reliance on gas in New England led to price spikes. Source: Department of Energy

Moniz replied that pipeline constraints were the first issue the QER set out to address, but noted that 2016 would see substantial increases in capacity as the Algonquin Incremental Market project comes online.

Storage, Renewables, and DG

One of the key elements of electrical transmission infrastructure discussed in the QER is energy storage, which Sen. Martin Heinrich (D-N.M.) called out as technology "that could move us forward to a very different kind of grid." Moniz agreed, saying "storage certainly could be a game-changer." He said the DOE is offering strong support "across the board."

Moniz emphasized that storage would affect operations across the entire grid. "Consumer-level storage combined with distributed generation is getting to be extremely interesting and can be yet another challenge to the utility business model."

Heinrich discussed some examples of utility resistance to distributed generation (DG), and asked Moniz if he thought state regulators had "all the tools they need to make informed decisions" on the complete costs and benefits of DG and storage.

Moniz replied, "We really need to work on getting better evaluation algorithms for all kinds of services that are being provided in the grid." With respect to getting an accurate picture of the impacts of net metering and distributed solar, "This is a critical problem," he said, "and certainly something to work on."

King brought up storage and DG as well, suggesting the DOE needed to be thinking about offering guidance on the right price structure and incentives.

Sen. Maria Cantwell (D-Wash.) asked Moniz what needed to be done to enhance security and resilience of the electric grid, asking specifically about high-voltage transformers, which the QER cited as one key vulnerability. Moniz replied that this was why the QER recommends developing a public-private partnership with utilities to come up with a more uniform way of having backups on hand in the event of a problem.

"These large transformers," Moniz said, "tend to be unique. They are, if you have a problem, very hard to replace. They cost millions of dollars each. It may take six months to replace it."

Implementation

Sen. Murkowski's first and last questions to Moniz addressed how the administration intended to avoid the fate of so many previous policy recommendations that ultimately led to nothing.

Moniz responded that staff members who worked on the QER spent considerable time speaking to members of Congress, and he felt that the broad interest and positive feedback they encountered "might provide a good basis for the kind of discussion that we need."

"I have no interest in having a wonderful document on the library shelf as opposed to an implementation plan," he said later.

-Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine)

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