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«Thank you Chairman Whitfield, Ranking Member Rush, and distinguished Members of the Subcommittee. I appreciate the opportunity to discuss with you ...»

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• Supporting the updating and expansion of state energy assurance plans, and establishing a competitive grant program to promote innovative solutions to enhance energy infrastructure resilience, reliability, and security. DOE should undertake a multi-year program of support for state energy assurance plans, focusing on improving the capacity of states and localities to identify potential energy disruptions, quantify their impacts, share information, and develop and exercise comprehensive plans that respond to those disruptions and reduce the threat of future disruptions. The estimated cost for this program is $350 - $500 million over 10 years. DOE should also establish a program to provide competitively awarded grants to states to demonstrate innovative approaches to TS&D infrastructure hardening and enhancing resilience and reliability. A major focus of the program would be the demonstration of new approaches to enhance regional grid resilience, implemented through the states by public and publicly regulated entities on a cost-shared basis. The estimated cost for this program is $3 -$5 billion over 10 years.

• Analyze the policies, technical specifications, and logistical and program structures needed to mitigate the risks associated with loss of transformers. As part of the Administration’s ongoing efforts to develop a formal national strategy for strengthening the security and resilience of the entire electric grid for threats and hazards (planned for release in 2015), DOE should coordinate with the Department of Homeland Security and other Federal agencies, states, and industry—an initiative to mitigate the risks associated

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Modernizing the Electric Grid Electricity is central to the well-being of the Nation. The United States has one of the world’s most reliable, affordable, and increasingly clean electric systems, but it is currently at a strategic inflection point—a time of significant change for a system that has had relatively stable rules of the road for nearly a century. To enhance the development of a modern electric grid, the QER

recommends:

• Providing state financial assistance to promote and integrate TS&D infrastructure investment plans for electricity reliability, affordability, efficiency, lower carbon generation, and environmental protection. In making awards under this program, DOE should require cooperation within the planning process of energy offices, public utility commissions, and environmental regulators within each state; with their counterparts in other states; and with infrastructure owners and operators and other entities responsible for maintaining the reliability of the bulk power system. The estimated cost for this program is $300 - $350 million over 5 years.

• Promoting grid modernization. DOE has made a comprehensive grid modernization proposal in the President’s Fiscal Year (FY) 2016 Budget request. The crosscutting proposal supports strategic DOE investments in foundational technology development, enhanced security capabilities, and greater institutional support and stakeholder engagement, all of which are designed to provide the tools necessary for the evolution to the grid of the future. The estimated cost for this program is $3.5 billion over ten years.

• Improving grid communication through standards and interoperability. In conjunction with the National Institute of Standards and Technology and other Federal agencies, DOE should work with industry, the Institute of Electrical and Electronics Engineers, state officials, and other interested parties to identify additional efforts the Federal Government can take to better promote open standards that enhance connectivity and interoperability on the electric grid.

Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

Until recently, the concept of energy security has focused on “oil security” as a proxy for “energy security.” It is clear, however, that energy security needs to be more broadly defined to cover not only oil but other sources of supply, and to be based not only on the ability to withstand shocks but also to be able to recover quickly from any shocks that do occur. To

achieve this shared goal, the QER recommends:

• Investing to optimize the Strategic Petroleum Reserve (SPR’s) emergency response capability. DOE should analyze appropriate SPR size and configuration, and, after carrying out detailed engineering studies, DOE should make infrastructure investments to the SPR and its distribution systems to optimize the SPR’s ability to protect the U.S.

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• Updating SPR release authorities to reflect modern oil markets. Congress should update SPR release authorities to allow the SPR to be used more effectively to prevent serious economic harm to the United States in case of energy supply emergencies.

• Supporting fuels diversity through research, demonstration, and analysis. DOE and the Department of Defense should continue research and demonstration activities to develop biofuels that are compatible with existing petroleum fuel infrastructure, especially in aviation and for large vehicles. DOE should provide technical support to states, communities or private entities wishing to invest in infrastructure to dispense higher-level ethanol blends. DOE should ensure adequate support for data collection and analysis on fuels, like propane, that play an important role in the Nation’s diverse energy mix and are challenged by changing TS&D infrastructures.





Improving Shared Transport Infrastructures

Changes in the U.S. energy production and use affect the way that energy and other commodities are transported in the United States. The use of transportation modes (e.g., rail, barge, and truck transport) that are also shared by agricultural and other major commodities, has been joined by significant growth in the use of these transport modes by crude oil, refined petroleum products,

and petrochemicals. To better manage shifting utilization patterns, the QER proposes:

• Supporting a new program of competitively awarded grants for shared energy transport systems. A new grant program – Actions to Support Shared Energy Transport Systems or ASSETS -- should be established and supported at the U.S. Department of Transportation (DOT), in close cooperation with the DOE. This program should be dedicated to improving energy transportation infrastructure connectors. The estimated scale of ASSETS investment should be on the order of $2 - $2.5 billion over the next 10 years, which would likely mobilize $4 - $5 billion in non-Federal investment, based on typical TIGER (Transportation Infrastructure Generating Economic Recovery) cost shares.

• Addressing critical energy data gaps in the rail transport of energy commodities and supplies. Congress should fund the President’s FY 2016 Budget request for the Energy Information Administration to address critical energy transportation data gaps and continued data sharing with the Surface Transportation Board.

• Supporting alternative funding mechanisms for waterborne freight infrastructure. The Administration should continue to examine alternative financing arrangements for waterborne transportation infrastructure and to develop strategies for public-private partnerships to finance port and waterway infrastructure.

7Integrating North American Energy Markets

The United States, Canada, and Mexico, as well as other North American neighbors, benefit from a vast and diverse energy TS&D network that has enabled the region to achieve economic, energy security, and environmental goals. To bolster this strong foundation, the QER

recommends:

• Establishing programs for academic institutions and not-for-profits to develop legal, regulatory, and policy roadmaps for harmonizing regulations across borders. In partnership with universities, qualified not-for-profits, and relevant U.S. energy regulatory authorities, state/province, local, and national energy regulations will be compared to identify gaps, best practices, and inconsistencies with regulations in Canada and/or Mexico with the goal of harmonization.

• Increasing the integration of energy data among the United States, Canada, and Mexico. Provide resources for the Energy Information Administration to collaborate with its Canadian and Mexican counterparts to systematically compare their respective export and import data, validate data, and improve data quality. In addition, efforts should be taken to better share geographic information system data to develop energy system maps and review forward-looking assessments and projections of energy resources, flows, and demand.

• Promote Caribbean energy TS&D infrastructure. As part of a larger Caribbean strategy, the United States should support the diversification of energy supplies, including actions to facilitate the introduction of cleaner forms of energy and development of resilient energy TS&D infrastructure in the Caribbean.

Additional insights and recommendations are included in the Summary for Policymakers from the QER. I ask the Chairman’s permission to submit this summary for the record.

Conclusion Periods of significant national prosperity have been frequently accompanied by Federal investments in a range of infrastructures—highways, rural electrification, providing water to open up the West. Some of the QER’s recommendations will require similar investments in our energy infrastructures at a critical time for shaping our energy system. These will however, leverage significant private investment and pay big dividends for the country—high-paying jobs, increased energy security, and a cleaner environment.

The Administration’s most recent budget request includes funding for some of the QER’s key recommendations. Its full implementation will, however, require a bipartisan commitment to modernizing the Nation’s energy infrastructures. The decisions to do so will strongly influence our energy mix for much of the 21st century. The QER released by the Administration in April provides a roadmap to help us make the right choices.

8 In closing, we at the Department of Energy, and all of the agencies that have developed this report and its recommendations, see enormous potential for benefit from the recommendations we have made. We very much look forward to working with Members of this Committee, and others in Congress, as we take the next steps together to assure our energy TS&D infrastructure is resilient, and sustains our economy in the future.

Chairman Whitfield and Ranking Member Rush, this concludes my statement. I will be pleased to answer any questions.

9

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