Hearing of the Senate Energy and Natural Resources Committee - Energy Efficiency

Hearing

"Thank you, Madam Chairman, for holding this, the first of several legislative hearings,
on a process to move us forward on energy policy. And hopefully we will be building a
record here--an important first step in crafting successful legislation that we can move
through both the House and the Senate.

"I want to thank the witnesses today. We are going to hear from several of our
colleagues. I certainly appreciate Sen. Collins and Sen. Coons for being here, for their
leadership on a variety of issues related to energy efficiency and for their continued
focus in this area. I know our colleague Sen. Klobuchar also is joining us l, and she
yesterday chaired a roundtable discussion with many energy efficiency leaders, and so
we thank her for that as well.

"Today we are here to discuss energy efficiency, which is--in some ways--the most
obvious of energy sources. Why is that? Well it's pretty simple. It's just the math. It's the
compelling economics. Energy efficiency costs less than half of a unit of new energy
production. The Lawrence Berkeley National Laboratory has estimated that the cost of
energy efficiency is 4.5 cents per kilowatt hour, compared to 12 cents per kilowatt hour
for new production. In short, energy efficiency as a resource is larger and cheaper, a
better job creator and carries lower environmental impacts than other alternatives.
"Not only does it save consumers money, but it strengthens the economy, adds
flexibility to our grid and reduces carbon pollution.

"Let me say just a few words about the economic benefits. From 2007 to 2014, national
energy use fell by 2.4 percent while GDP grew by 8 percent. In other words, we
experienced an energy productivity increase of 11 percent in eight years. That means
that, for every electron or molecule of energy consumed in the U.S., we are getting more
and more economic production.

"A handful of programs at the U.S. Department of Energy (DOE) are important
contributors to this dynamic. DOE's building codes program, for example, will help put
more than $7.4 billion per year back in consumers' pockets by 2020 and up to $230
billion through 2040.

"This program cost the federal government about $110 million from 1992 to 2012--
that's a ratio of $400 in savings for every federal dollar spent. That's a pretty impressive
ROI.

"Similarly, the appliance and equipment standards program costs the nation $40 million
annually, on average, but has reduced the nation's electricity consumption about 7
percent below what it would otherwise be. A typical household's energy costs are about
$500 a year less than would be the case if there had not been national appliance
efficiency standards.

"When we discuss those initiatives, I think it's also important for my colleagues to
remember that--as is often the case--these successful federal programs have been
built on the hard work and leadership of a number of states.

"The drive toward energy efficiency--at the time, policymakers called it
"conservation'--really began in the 1970s with efforts on the west coast. Since then,
California's efficiency efforts have helped the state avoid the need for at least 30 power
plants, saved consumers $65 billion and eliminated carbon pollution equivalent to
taking 5 million cars off the road.

"The Northwest Power Act--which originated in this committee and was enacted in
1980--made conservation the resource of first resort in our regional power plan and
even gave rise to some of the nation's first "model conservation code' efforts.

"Today, some 24 states also have on the books their own Energy Efficiency Resources
Standards, binding savings targets for utilities or similar entities.

"Once again, I think it's fair to say that resources that cost consumers less, make our
economy more competitive and reduce environmental impacts are always a good thing
for the nation.

"So the question for us today: how do we drive more efficiency into our economy?

"The U.S. economy is so diverse, and dozens of opportunities exist across the
residential, commercial, industrial, agricultural and government sectors. I think we
should consider a number of approaches to fully leverage these opportunities.

"First, we need the right framework and incentives for utilities to fully embrace
efficiency as the least-cost resource. Sen. Franken's legislation, which we are going to
hear about today, establishes a federal Energy Efficiency Resource Standard and is one
method to drive this outcome. So I look forward to that topic today.

"And in my state, Seattle City Light used a variety of efficiency measures to reduce its
load annually by 1.3 million megawatt hours, which is the equivalent of a 150 megawatt
power plant. So we need to create similar conditions for more such examples.

"Second, we need a robust federal commitment to research and development (R&D) of
new technologies that will continue lead the way on energy. Technology innovation is
one of the key ways to create a continuous cycle of opportunity for more efficiency.

"One example of this is the opportunity of R&D on high performance buildings. We have
major employers that are aggregating and analyzing building data on their corporate
campuses, in order to learn where costs can be cut, and to help achieve their own
carbon reduction goals. So, I have introduced legislation to help accelerate this
transition to smart buildings, by supporting research on the kinds of data, software and
communications systems this will require.

"We also can't forget the opportunities for efficiency on the transmission and
distribution infrastructure. On Tuesday, Secretary Moniz was here on the Quadrennial
Energy Review and outlined several recommendations of things that we need to do to
create more flexibility and more resilience and to increase energy efficiency.

"And third, we must be committed to the network of partnerships among federal, state
and local institutions, manufacturers, utilities, consumers and other stakeholders. They
all play a role in this. But the issue is that we have to have federal leadership with
respect to the appliance and equipment standards that have lessened industry's
regulatory burden and to be a platform for demonstration. Most people will tell you that
the demonstrations the federal government show then able the private sector to
implement these across many different businesses.

"So there's a lot to be done in driving these outcomes. But I look forward to working
with Chairman Murkowski and members of this committee, who all have great ideas on
putting a good energy efficiency title in an energy bill. Thank you."

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