COMMONWEALTH OF HOUSE OF REPRESENTATIVES

CONSUMER AFFAIRS COMMITTEE PUBLIC HEARING

STATE CAPITOL HARRISBURG, PA

MAIN CAPITOL BUILDING ROOM 14 0

MONDAY, APRIL 8, 2 019 11:00 A.M.

PRESENTATION ON HOUSE BILL 11, UPDATING THE PENNSYLVANIA ALTERNATIVE ENERGY PORTFOLIO STANDARDS (AEPS) ACT

BEFORE: HONORABLE , MAJORITY CHAIRMAN HONORABLE SHERYL DELOZIER HONORABLE HONORABLE HONORABLE HONORABLE THOMAS MEHAFFIE HONORABLE HONORABLE ERIC NELSON HONORABLE HONORABLE THOMAS SANKEY HONORABLE HONORABLE ROB MATZIE, DEMOCRATIC CHAIRMAN HONORABLE HONORABLE HONORABLE AUSTIN DAVIS HONORABLE TINA DAVIS HONORABLE MARTY FLYNN HONORABLE HONORABLE HONORABLE

* * * * * Pennsylvania House of Representatives Commonwealth of Pennsylvania 2

COMMITTEE STAFF PRESENT: PHIL KIRCHNER MAJORITY EXECUTIVE DIRECTOR HEATHER RODGERS MAJORITY LEGISLATIVE ADMINISTRATIVE ASSISTANT II JES BLAIR MAJORITY ADMINISTRATIVE ASSISTANT TRAINER

ELIZABETH ROSENTEL DEMOCRATIC EXECUTIVE DIRECTOR BRETT BIGGICA DEMOCRATIC RESEARCH ANALYST TIM SCOTT DEMOCRATIC RESEARCH ANALYST 3

I N D E X

TESTIFIERS

* * *

NAME PAGE

TOM RIDGE FORMER GOVERNOR AND FIRST SECRETARY OF HOMELAND SECURITY...... 6

MIKE PRIES COMMISSIONER, DAUPHIN COUNTY...... 15

STEVE BRAME VICE PRESIDENT OF PUBLIC AFFAIRS AND MEMBER SERVICES, PENNSYLVANIA RURAL ELECTRIC ASSOCIATION...... 21

DAVE GRIFFING VICE PRESIDENT OF GOVERNMENT AFFAIRS, FIRSTENERGY SOLUTIONS...... 25

KEVIN SUNDAY DIRECTOR OF GOVERNMENT AFFAIRS, PA CHAMBER OF BUSINESS AND INDUSTRY...... 49

GLEN THOMAS PRESIDENT, GT POWER GROUP...... 54

TODD SNITCHLER VICE PRESIDENT OF MARKET DEVELOPMENT, AMERICAN PETROLEUM INSTITUTE...... 61

DESIREE HUNG AARP PENNSYLVANIA...... 68

SUBMITTED WRITTEN TESTIMONY

* * *

(See submitted written testimony and handouts online.) 4

1 P R O C E E D I N G S

2 * * *

3 MAJORITY CHAIRMAN ROAE: Good morning, everyone.

4 It is now exactly 11 o'clock, so I'm calling this public

5 hearing of the House Consumer Affairs Committee to order.

6 The topic we have before us today is House Bill

7 11. There's going to be two panels today. The first panel

8 is going to be speaking in support of House Bill 11, and

9 the second panel is going to speak in opposition of House

10 Bill 11. Each panel is going to have 55 minutes to make

11 their presentations, and it's my understanding that both

12 panels plan on speaking for 20 or 30 minutes and leaving

13 the remainder of their time for questions from the Members.

14 So at noon we're going to switch to have the second panel,

15 and then we're going to close the meeting hopefully at

16 about 12:55 or 12:56 so Members can get to the Floor.

17 Of all the issues I've seen in the Legislature

18 since being elected 12 years ago, this is probably one of

19 the most complex and technical issues that we've faced.

20 There's a lot of moving parts with this, and I thought it

21 was important that Members have an opportunity to learn as

22 much as possible about this very complex and technical

23 issue. So we're going to hopefully learn a lot today.

24 And it is interesting. People supporting the

25 legislation say that if we don't do it, our electric bills 5

1 are going to go up. People opposing the legislation say if

2 we do do it, our electric bills are going to go up, so

3 hopefully that can get clarified a little bit today.

4 And I'm going to have the Democratic Chairman,

5 Representative Matzie, make an opening statement if he

6 would like.

7 DEMOCRATIC CHAIRMAN MATZIE: Thank you,

8 Mr. Chairman.

9 Just read briefly so we can get to the testimony

10 and the Q&A, I want to thank you for your leadership as the

11 Majority Chairman and ensuring that all sides are heard on

12 this issue. I think it was important to have hearings on

13 this bill and actually have a legislative process work. A

14 bill was drafted, a bill was introduced, and now, as the

15 Committee Chairman in which the bill was placed, you

16 decided to have hearings, multiple hearings, so I commend

17 you on that and look forward to the robust discussion, so

18 thank you.

19 MAJORITY CHAIRMAN ROAE: All right. With that,

20 the first panel -- I'm just going to introduce everybody

21 now. The first panel is going to be Tom Ridge, who's the

22 former Governor and first Secretary of Homeland Security;

23 Mike Pries, who's a Dauphine County Commissioner; Steve

24 Brame from the Pennsylvania Rural Electric Association; and

25 Dave Griffing from FirstEnergy Solutions. 6

1 And so, as I Stated before, the panel will have

2 55 minutes, so go ahead, Governor, when you're ready, and

3 start your testimony. Thank you.

4 MR. RIDGE: Thank you, Mr. Chairman. Chairman

5 Roae, Chairman Matzie, Members of the Committee, I want to

6 thank you for the invitation to join you this morning.

7 Today, I would like to address certain aspects of House

8 Bill 11 that touch on issues that I was engaged in both as

9 Governor of the Commonwealth, especially the restructuring

10 of the electric power industry, and issues that I dealt

11 with as the Nation's first Homeland Security Secretary,

12 including the implications for national security and the

13 safety and security of the Commonwealth.

14 It's no secret I support the passage of House

15 Bill 11, and I appreciate the opportunity to share my point

16 of view with you and your fellow Committee Members. For

17 me, it's all about maintaining Pennsylvania's energy

18 leadership, our national security, and, as equally

19 important, the State's ongoing need for a clean as well as

20 business-friendly environment.

21 Pennsylvania and the Nation need diverse energy

22 resources to ensure our national security and global

23 competitiveness and to maintain our leadership role around

24 the world. As former Governor and Secretary of Homeland

25 Security, I've come to appreciate that only an electric 7

1 grid built on diverse and stable sources of energy can

2 withstand evolving threats and frankly keep the lights on.

3 As a critical source of energy that runs 24 hours

4 a day, seven days a week for 18 to 24 months at a time

5 without refueling, nuclear energy is a critical component

6 of a resilient electric grid. In my opinion, grid

7 resilience cannot be met without nuclear power, and grid

8 resilience is a key component of our national security. If

9 you think about it, we've got three -- the Secretary of

10 Homeland Security had to deal with multiple economic

11 sectors, but the three that are most prominent in my mind

12 in the area of critical infrastructure, telecommunications,

13 finance, and energy. Think about where we go without

14 redundancy and capability in those three.

15 Nuclear generation is most reliable and lowest-

16 cost source of zero-carbon electricity. You don't have to

17 take my word for it. There are recognized experts -­

18 you're aware of them -- MIT, Penn Union of Concerned

19 Scientists, and others -- who testified to that effect

20 during the extensive hearings conducted by the Pennsylvania

21 Legislature's bipartisan, bicameral Nuclear Energy Caucus.

22 Nuclear power's combination of secure fuel and

23 zero-carbon attributes frankly I think make it uniquely

24 valuable. The Pennsylvania State Legislature already

25 recognized those values when it overwhelmingly adopted 8

1 resolutions in support of fuel-secure resources in October

2 of 2017. That concurrent resolution specifically

3 recognized that the current design of the wholesale

4 electric markets results in prices that undervalue,

5 undervalue fuel-secure generation sources.

6 As you well know in the leadership positions that

7 you hold, States have the responsibility to their citizens

8 and the authority to ensure fuel diversity and compliance

9 simultaneously with Federal and State environmental goals.

10 This is best accomplished in my view by defining goals and

11 using a balance of competitive market forces and

12 requirements for direct markets to accomplish outcomes that

13 benefit the health and welfare of our citizens.

14 As you recall, as Governor, I lead the effort in

15 the mid-1990s with bipartisan support I might add in this

16 Pennsylvania Legislature to restructure Pennsylvania's

17 energy market. This has led to millions of dollars in

18 savings for the citizens of the Commonwealth and a strong

19 foundation to accomplish other results. The restructuring

20 did not change the State's authority and responsibility.

21 However, it met Federal laws, including goals for clean

22 energy.

23 One tool that Governors and State legislators

24 have utilized in over 30 States are portfolio standards.

25 As you again are well aware, such standards determine key 9

1 attributes needed to support the State's efforts to meet

2 clean energy goals and compliance with Federal pollution

3 rules. After I left office, the Pennsylvania Legislature

4 took action and established the Alternative Portfolio

5 Standards to ensure clean energy and attract investment.

6 This was done under a competitive structure that

7 complements the energy market restructuring we had

8 previously established in the Commonwealth.

9 While the AEPS casts a widely inclusive net over

10 existing clean energy resources, it missed one clean energy

11 resource: nuclear. Nuclear is the Nation's and the

12 Commonwealth's largest clean energy resource. The energy

13 market structures we have in Pennsylvania, they are robust,

14 and they will accommodate changes to AEPS to put nuclear

15 energy on a level playing field. Including nuclear energy

16 in the AEPS will not hinder competition and the ability of

17 customers to buy electricity.

18 The PJM, they auction energy every five minutes.

19 They've got to be competitive every five minutes. AEPS has

20 and will continue to coexist with competitive markets

21 energy. It will still be procured in a competitive market

22 at the lowest cost. Every five minutes, the lowest cost

23 gets the bid.

24 The AEPS provides a way to recognize other

25 attributes which I think we value as citizens and should 10

1 value as representatives of these citizens and procure

2 mixed results that benefit the health and welfare of our

3 citizens. It is not prudent to wait for action from other

4 court orders such as the Federal Government or PJM.

5 Today, the Commonwealth and Nation face numerous

6 both manmade and natural threats -- and remember, directed

7 toward these three critical pieces of infrastructure of

8 which I think energy may be the most important -- from the

9 polar vortexes, the terrorist attacks, to cyber attacks

10 that wholesale markets were not designed to handle. There

11 is a misalignment of market incentives and resilience in

12 the face of such threats. These market gaps have resulted

13 in inadequate revenue to maintain and operate the most

14 important resources needed to provide reliability and price

15 stability during extreme periods such as during an extended

16 deep-freeze or, heaven forbid, a failure of a major

17 pipeline.

18 Now, nationally, and I think this can't be

19 underscored enough, nuclear energy accounts for barely 20

20 percent of our power according to the Energy Information

21 Administration, and that share is declining, ladies and

22 gentlemen, as more plants come off-line. Interestingly

23 enough, China has embarked on a high-profile campaign to

24 build 60 nuclear power plants over the next decade. The

25 U.S. has closed or retired 13 since 2012 with an additional 11

1 20 at risk, 20 at risk of shutting down in the coming years

2 according to industry experts. If current trends continue,

3 nuclear could fall to just 10 to 15 percent of our energy

4 supply. In my judgment, that's a dangerously low

5 percentage from a national security standpoint.

6 This retreat risks another element of our

7 national security, leverage over how other nations use

8 nuclear power. When other nations buy Russian and Chinese

9 nuclear exports, as they increasingly do, Moscow and

10 Beijing and not Washington set the standards. That is why

11 last year over 70 former U.S. Statesmen and military

12 leaders and national security officials sent a letter to

13 the Secretary of Energy making a strong endorsement of

14 nuclear energy's national security importance. I'm merely

15 here to second their endorsement and that point of view.

16 Pennsylvania's historical leadership in nuclear

17 energy is at risk. The premature retirements of Beaver

18 Valley, Three Mile Island, and potentially other nuclear

19 plants within the Commonwealth will put Pennsylvania in the

20 category of other States that watched why they lost these

21 valuable resources. They're assets, and they ought to be

22 viewed as assets such as the resource lost in Vermont. And

23 if you take a look at what happened to that community after

24 they closed the Yankee plant, it's very revealing in terms

25 of the economic impact. 12

1 Securing Pennsylvania's leadership in nuclear

2 energy by including within the AEPS -- frankly, we're all

3 in the business of saving and promoting jobs -- this will

4 save jobs, keep America secure, and retain a critical asset

5 to our energy infrastructure. Two-thirds of Pennsylvania

6 voters believe the State needs to be more active in

7 addressing climate change according to a recent Franklin &

8 Marshall Poll. A majority of them believe nuclear power

9 should be part of the State's strategy. Similar polling

10 results are being seen across the country. It's only a

11 matter of time before the Federal or State legislation will

12 require more carbon-free electricity.

13 Nuclear power generation is also vital to local

14 growth and opportunities. When I was Governor, we spent a

15 lot of time making sure to keep the jobs we had right here

16 in Pennsylvania. You know, it's always been exciting when

17 you can attract jobs into PA, but before you attract them,

18 you don't want to replace ones you lost; you want to build

19 on the jobs you already have. That's a good philosophy to

20 take, and I think it's a philosophy we ought to apply in

21 House Bill 11 as well. I know that's your priority,

22 preserving jobs and creating new ones, so I think I'm

23 speaking to the choir in that regard.

24 Pennsylvania's status as a net exporter of energy

25 -- think about that -- is an extremely important economic 13

1 engine for the State. Retirements of nuclear power plants

2 are permanent. They're permanent and irreversible, and

3 once gone, the plants, the facilities, and the jobs are not

4 coming back. And, by the way, the nuclear engineers that

5 retire from Penn State may end up working over in China as

6 they build 60 power plants and we're closing ours.

7 Let me, if you will, share a personal

8 recollection in the weeks and months following 9/11 after I

9 was asked by the President to leave a job I loved to join

10 him at the White House and assume the responsibilities of

11 Homeland Security Advisor before we built the Department.

12 One of my early priorities was to better understand our

13 national defense and the industries that support it to help

14 keep our country safe. It was during this time that I was

15 able to personally experience the professionalism, the

16 dedication, and the expertise of the men and women who

17 operate our nuclear plants here in Pennsylvania and, by the

18 way, across the Nation. All Pennsylvania should be proud

19 of the professionals who operate these incredibly complex,

20 complicated, highly regulated, valuable assets and proud of

21 the role our Commonwealth has played for more than a half a

22 century as a national leader in nuclear energy.

23 Now the famous part of anybody's testimony at

24 least from your point of view, let me close. Let me close

25 with this. Pennsylvania has control over its energy 14

1 future, and over the years, I've been privileged to talk to

2 a lot of people about government and politics. It's

3 something that you and I feel are very important, or else

4 you wouldn't be where you are, I wouldn't be where I have

5 been and here today. Politics is always about tomorrow.

6 And when I talk to younger people, I say you ought to be

7 more interested in politics than I am because you have more

8 tomorrows than I do. They have more tomorrows. The

9 calendar guarantees they have more tomorrows. And so this

10 is a policy decision about the kind of Pennsylvania we want

11 for tomorrow and frankly the kind of country we want for

12 tomorrow.

13 This Committee has before it a bill I believe it

14 furthers the objectives of our State and frankly of our

15 country, a future of clean, reliable energy, continued

16 status as a net exporter of energy, and preservations of

17 thousands and -- I like this notion -- of family-sustaining

18 jobs. You know when they closed the Vermont facility, the

19 average -- I don't know what the average salary up there

20 was, but in Vermont the average salary was over $100,000.

21 Those are family-sustaining jobs. They were lost. Adding

22 nuclear power to the AEPS, it's compatible with competitive

23 markets. The market will continue to be competitive. It's

24 competitive every five minutes, and it will strengthen and

25 preserve one of the Commonwealth's most resilient resources 15

1 of electricity. The goal of good resilience, reducing our

2 vulnerability and enhancing our safety and security, cannot

3 be met without nuclear power.

4 As a former legislator, I appreciate the work you

5 and your Committee are doing, Mr. Chairman, and I

6 appreciate the kind invitation to express my points of view

7 this morning. Thank you very much.

8 May I invite my other colleagues to join me?

9 MAJORITY CHAIRMAN ROAE: Yes, the other members

10 of the panel can come to the table at their convenience.

11 And whenever you're ready, just introduce yourself and

12 start your testimony, whoever's going to go next.

13 MR. PRIES: Good morning, everyone. My name is

14 Mark Pries, and I'm a Dauphin County Commissioner, and I

15 just want to say, Governor, I get to tell my children that

16 I got to follow-up not only Governor Ridge but the first

17 Homeland Security Director in this great Nation.

18 MR. RIDGE: Be careful who you share that with.

19 MR. PRIES: It's truly an honor, truly an honor.

20 And I want to thank each and every one of you for the

21 wonderful job you do representing your constituents in your

22 legislative districts across the Commonwealth of

23 Pennsylvania.

24 As I said, my name is Mike Pries, and I'm a

25 Dauphin County Commissioner. I'm also proud to serve as a 16

1 Co-Chair of the Clean Jobs for Pennsylvania Coalition.

2 When this broad-based community coalition was formed almost

3 two years ago, we sounded the alarm for the need for a

4 State solution to place nuclear power on equal footing with

5 other zero-emission energy sources throughout Pennsylvania.

6 Without action, Three Mile Island will shut down

7 prematurely this fall, and the two-unit Beaver Valley plant

8 will do so in 2021. I fear our State's three other nuclear

9 plants will not be far behind, so I applaud this Committee

10 for holding this hearing today as the clock is ticking on a

11 solution to this extremely important issue.

12 This morning, I would like to address the

13 significant positive local impact we see from having Three

14 Mile Island operate in our community. I know from talking

15 to my colleagues that these same impacts are felt in the

16 other Pennsylvania communities near nuclear plants as well.

17 TMI is an asset to our community in so many ways. It's a

18 major employer for our local residents, providing close to

19 700 well-paying, steady, family-sustaining jobs. These

20 people buy homes in our neighborhoods, have kids in our

21 schools, and volunteer in our local fire companies. They

22 are part of us.

23 Beyond the permanent jobs, there are tangential

24 services and companies that rely on Three Mile Island and

25 its employees, local restaurants, stores, contractors, et 17

1 cetera. That's not to mention the influx of workers who

2 come in during regularly scheduled outages. During these

3 maintenance outages, which will occur this September, TMI

4 employs about 1,200 to 1,600 supplemental workers for a

5 period of four to six weeks. These folks stay in our local

6 hotels, eat in our restaurants, and shop in our stores. If

7 the State Legislature takes action, TMI will perform

8 another refueling outage this fall, creating these

9 additional jobs. And I might add that, of those employees

10 that come in, that's literally 36 to 48,000 room nights in

11 Central Pennsylvania at our local hotels.

12 Many of these men and women live in the area and

13 are members of the Central Pennsylvania building and

14 construction trades. If action is not taken, all of these

15 jobs will be lost forever. As a County Commissioner, I

16 know job retention is as important as job creation. With

17 these workers comes a tax base that our community depends

18 upon as well. TMI itself contributes more than $1 million

19 in property taxes each year, and this is in addition to the

20 taxes that TMI employees pay. The total TMI payroll comes

21 in around $60 million annually. This loss would impact our

22 police force, our fire departments, and especially our

23 schools. The closure of Three Mile Island would result in

24 $700,000 in tax revenue in the Lower Dauphin School

25 District alone. Our local taxing authorities will have to 18

1 cut services or increase taxes, and that is a reality.

2 From a community-giving perspective, TMI and its

3 employees are extremely generous and contribute more than

4 $300,000 a year in charitable giving to area nonprofits.

5 They are a top giver to the United Way agency, a prime

6 sponsor of a mobile bookmobile that provides books and

7 computer access to underserved areas within our

8 communities. TMI has contributed close to $700,000 to the

9 Londonderry Fire Company, allowing them to purchase much-

10 needed safety equipment without raising taxes on the

11 residents who benefit.

12 Speaking of first responders, TMI paid $425,000

13 in fees to the Pennsylvania Emergency Management Agency in

14 2018 alone. PEMA redistributes most of these funds to

15 counties and municipalities around TMI for all hazard

16 emergency planning. Those fees will dry up in about a year

17 or two if the plant closes. It's likely that full-time

18 emergency management positions will be lost as a result,

19 and so will much-needed training and drills. It's because

20 TMI funds that position here in Dauphin County. TMI also

21 currently provides all hazard emergency management training

22 to our local fire companies. That service will also be

23 discontinued if the plant closes.

24 Beyond its significant positive socioeconomic

25 impact, TMI generates enough zero-emission energy for 19

1 800,000 homes without polluting our air. In fact, TMI

2 generates more zero-emission energy than all other

3 renewable energy sources in Pennsylvania combined. Why in

4 the world would we not want to include nuclear in our State

5 zero-emission program into the future?

6 Pennsylvania should learn from the cautionary

7 example of Vermont and Wisconsin, which recently allowed

8 nuclear plants to close prematurely. Studies and

9 experiences in other States show that when nuclear plants

10 shut down, the cost of electricity increases. Among the

11 hardest hit by electricity price increases are our senior

12 citizens on fixed incomes. Further, since the single unit

13 Vermont Yankee plant closed in 2014, the local municipality

14 cut its budget by 20 percent and eliminated its police

15 force, this after residents saw a 20 percent property tax

16 increase.

17 In Wisconsin, electricity prices increased by 5

18 percent after the early closing of the single unit Kewaunee

19 Power Station, and Kewaunee County lost 30 percent of its

20 tax revenue. In both States, greenhouse gas emissions

21 increased right after the plants closed. This is what

22 awaits us here in Pennsylvania without action.

23 But this issue is not unique to Pennsylvania.

24 When faced with similar challenges, New York, Illinois, New

25 Jersey, and Connecticut have all adopted zero-emissions 20

1 certificate programs and have been able to keep nuclear

2 plants operating and their air cleaner. I believe it's

3 time for Pennsylvania to do the same.

4 And you know what, Pennsylvanians think it's time

5 to do the same, too. Our coalition just last week asked

6 the experts at Harper Polling here in Harrisburg to conduct

7 a Statewide poll of 500 likely voters. The survey found

8 that not only do 63 percent have a favorable opinion of

9 nuclear power, 72 percent said they would be more likely to

10 vote for a State legislator who fights in Harrisburg to

11 keep nuclear power plants open. Only 9 percent said they'd

12 be less likely. And more to the point of House Bill 11,

13 when asked if they would favor a proposal being considered

14 which would add nuclear energy to Pennsylvania's AEPS

15 giving nuclear energy many of the same incentives as wind,

16 solar, and hydroelectric and would help keep electricity

17 prices in check, a whopping 75 percent said they're in

18 favor. That's three out of four likely voters who said

19 just last week they would support House Bill 11.

20 In closing, the clock is ticking. We've sounded

21 the alarm. My constituents, your constituents are counting

22 on you to get this done. Let's not look back five years

23 from now and ask ourselves why did we allow these jobs,

24 these economic engine drivers, to get away? I urge you to

25 take prompt action to pass House Bill 11 to ensure our 21

1 State continues to enjoy the economic, environmental, and

2 reliability of our zero-emission nuclear power plants.

3 Thank you.

4 MR. BRAME: Thank you, Chairman Roae, Chairman

5 Matzie, Members of the House Consumer Affairs Committee.

6 My name is Steve Brame. I am Vice President of Public

7 Affairs and Member Services for the Pennsylvania Rural

8 Electric Association, or most of you probably know us as

9 PREA. I've submitted written testimony today, so instead

10 of reading my testimony, I'm going to maybe go through a

11 few highlights of what I said and why we at PREA are so

12 involved in this critical issue.

13 PREA is the Statewide service organization

14 representing the interest of 13 rural electric cooperatives

15 in Pennsylvania, but more than that, we are advocates for

16 over 600,000 rural residents who rely on our cooperatives

17 for low-cost, reliable, and safe electricity. We believe

18 that supporting nuclear energy is critical for a diverse

19 and competitive energy marketplace. It's also of

20 particular importance to Pennsylvania's rural residents and

21 the energy future of all Pennsylvanians.

22 Who are electric cooperatives? Cooperatives were

23 formed decades ago when electric energy was not made

24 available in our rural communities. In fact, our history

25 begins with dairy farmers in rural Pennsylvania coming 22

1 together to take control of their future and form not-for-

2 profit electric cooperatives. Today, we serve rural

3 residents, family farms, retirees, our young in school, and

4 job creators in rural communities. Rural electric

5 cooperatives in Pennsylvania have a proud 80-year history

6 of delivering life-changing electric power to the rural

7 countryside.

8 But they didn't do it alone. They relied on

9 policymakers such as yourselves to step in and correct the

10 market that would not provide power to rural areas. It

11 took legislative action and forward-thinking policy to

12 bring about this change. Today, electrical cooperatives

13 are key economic drivers in their communities thanks to the

14 action of policymakers 80 years ago.

15 Electric cooperatives are governed by those who

16 use their power. In other words, our consumers are our

17 owners, just as they were the day they were created. Our

18 cooperatives operate as not-for-profit organizations driven

19 to provide the very best, least cost, and most reliable

20 service they can to our rural heartland.

21 We are pleased to be a part of the nuclear energy

22 discussion, and I want to be very, very clear that

23 Pennsylvania's electric cooperatives stand in support of

24 House Bill 11. Cooperatives have believed in nuclear power

25 for decades, having invested in the Susquehanna Steam 23

1 Electric Station in rural Berwick, Pennsylvania, since

2 1977. As a result of this investment, Pennsylvania's

3 cooperatives own 10 percent of the Susquehanna plant. We

4 believe our experience as nuclear owners can offer some

5 perspective on this important issue.

6 While an ownership share of one-tenth of one

7 nuclear plant may not sound like much, that small share

8 provides 60 percent of all the power needs for more than

9 600,000 Pennsylvania rural residents. For decades, that 10

10 percent share has been the stabilizing force that has

11 powered hundreds of rural cooperative communities across

12 the Commonwealth.

13 Today, these communities enjoy one of the lowest

14 and most stable electric rates in the entire PJM

15 interconnection thanks to the investment in nuclear power.

16 Just that 10 percent of one plant goes an incredibly long

17 way towards serving the needs of more than 600,000 rural

18 residents.

19 As a major part of the cooperative's diverse

20 energy portfolio, nuclear energy has allowed cooperatives

21 to maintain extremely reliable electric rates for decades

22 helping to protect rural communities from significant

23 volatility during times of economic turbulence. To fill

24 out our portfolio, cooperatives also depend on a

25 competitive energy market, one made stronger by the 24

1 presence of nuclear power. Its reliability has allowed our

2 cooperatives to interconnect more than 500 consumer-owned

3 renewable energy systems to the cooperative grid, thus, in

4 more ways than one, cooperative investment in nuclear power

5 has helped significantly further the production of carbon-

6 free energy in the Commonwealth for the benefit of all

7 Pennsylvanians.

8 Cooperatives believe that recognizing nuclear

9 power as a carbon-free workforce is vital to the diverse

10 energy community we strive to have in this State. Without

11 nuclear power, we believe the energy market will

12 necessarily be dependent on one major commodity: natural

13 gas. This is not an attack on natural gas. This is a

14 virtual certainty. Should nuclear power cease to be vital

15 in Pennsylvania, we believe it will significantly increase

16 costs to our rural cooperative consumers. That's seniors,

17 that's families, that's family farms.

18 Diversity is critical to the robust energy

19 marketplace that policymakers have envisioned in

20 Pennsylvania for decades. Nuclear must play a role in that

21 diversity. By leveling the playing field, by compensating

22 nuclear for its zero-carbon attributes, you can play the

23 key role in guaranteeing energy diversity.

24 On behalf of the 600,000 rural residents in the

25 13 electric cooperatives who are privileged to serve them 25

1 power, we thank you for the opportunity to join you today

2 and look forward to working with the Committee and the

3 General Assembly on this critical issue.

4 MR. GRIFFING: Thank you, Steve.

5 Chairman Roae, Chairman Matzie, distinguished

6 Members of the Committee, thank you for inviting me to

7 speak before you today. My name is Dave Griffing. I'm the

8 Vice President of Governmental Affairs for FirstEnergy

9 Solutions. And today, I'm here to represent the nuclear

10 generation facilities in the Commonwealth of Pennsylvania.

11 Nuclear power forms the backbone of

12 Pennsylvania's electric generation fleet and its energy

13 economy. Pennsylvania is the second-largest nuclear

14 capacity State in the country, home to nine nuclear

15 reactors at five stations across the State. Over 16,000

16 Pennsylvanians are employed in this industry, which

17 contributes $2 billion annually to the gross domestic

18 product and nearly $70 million in annual State taxes.

19 In addition to being an economic engine for the

20 State, nuclear power is safe, reliable, and clean. Nuclear

21 facilities operate at close to 100 percent capacity 24

22 hours a day with planned refueling outages only occurring

23 every 18 to 24 months. They avoid the fuel supply issues

24 faced by most other generating facilities such as

25 disruptions in natural gas pipeline networks, frozen coal 26

1 stockpiles, and other weather conditions that prevent

2 renewable energy production, all of which may threaten the

3 reliability of the power grid. And, importantly, the

4 production of electricity using nuclear fission produces no

5 air pollution and releases no carbon dioxide emissions.

6 Two of Pennsylvania's five nuclear plants have

7 announced plans to shut down. We've already heard that

8 today. Three Mile Island is scheduled to shut down in

9 September of 2019 and Beaver Valley, one of our plants, is

10 scheduled to shut down in 2021. Both plants are being

11 retired well before their current operating licenses are

12 set to expire, and once these plants are shut down, they

13 will not be brought back into operation. These two plants

14 are likely foreshadowing future premature retirements as

15 the other plants in Pennsylvania are on a similar

16 trajectory.

17 Others will try to convince you that these plants

18 are failing to complete and that you should let the market

19 decide what happens to them, so let's talk for a second

20 about that market. Pennsylvania participates in a

21 wholesale market call PJM, which is regulated by FERC.

22 That market decides what power is used in Pennsylvania

23 using rules they decide for us what power our customers

24 receive and what price they pay for it. The market does

25 not consider whether the power plant negatively impacts the 27

1 seven counties in the State that are already exceeding

2 their air pollution limits. It doesn't account for whether

3 the power plant adds harmful carbon pollution to the air.

4 It doesn't account whether the plan has a reliable source

5 of fuel on-site, and it doesn't consider what is best for

6 the customers in Pennsylvania over the long-term. All it

7 does is pick the power that is cheapest for the next five-

8 minute increment.

9 Many States, including Pennsylvania, have stepped

10 in to promote a cleaner, more diverse generation fleet. In

11 2004, Pennsylvania enacted the Alternative Energy Portfolio

12 Standard Act, or AEPS, which provides financial support for

13 16 forms of clean energy, including wind, solar, and

14 hydroelectric power. But nuclear resources, despite being

15 the State's largest source of clean energy, are not

16 eligible for the program. Because of that, it is not

17 credible to say that the plants aren't able to compete, and

18 it's unfair to the 16,000 Pennsylvanians who safely support

19 and operate those plants 24/7, 365. On one hand, emitting

20 plants get to pollute for free not bearing any of the cost

21 of the pollution they put into the air or the water. And

22 on the other hand 16 other forms of technology get a

23 payment, some as high as $55 from the Federal and State

24 government through tax credits and AEPS credits. The

25 result is not shocking. Nuclear facilities here and 28

1 elsewhere in the country have both hands tied behind their

2 backs and are facing the prospect of premature retirement.

3 The impact of losing the State's nuclear

4 facilities cannot be overstated. Nuclear power represents

5 93 percent of the Commonwealth zero-carbon electricity.

6 These facilities allow the State to avoid 37 million tons

7 of CO2 annually and prevent significant emissions of

8 criteria pollutants like sulfur dioxide, nitrogen oxide,

9 and other particulate matter. Independent experts value

10 these contributions at $1.6 billion and $260 million

11 annually per year. If these facilities are lost, they will

12 be replaced primarily by natural gas-fired generators, not

13 wind and not solar. Carbon emissions will increase, grid

14 resilience will deteriorate, and cost to consumers will go

15 up by $788 million per year according to the Brattle Group.

16 The proposed legislation will temporarily prevent

17 this outcome and give the Federal Government and PJM time

18 to work together on a permanent solution. This legislation

19 would amend the Pennsylvania AEPS to create a new tier 3

20 credit program open to nuclear power along with existing

21 tier 1 and tier 2 credit programs. This new tier will put

22 nuclear power on equal footing with other clean energy

23 resources in the State.

24 One tier 3 credit would be earned for each

25 megawatt hour of electricity produced by a qualifying 29

1 resource, and Pennsylvania's electric utilities would be

2 required to purchase these credits from qualifying

3 facilities as they currently do for wind, solar, waste

4 energy, hydro, and other environmentally beneficial

5 technologies. The tier 3 credit price would be tied to the

6 tier 1 credit price but would contain both a floor and a

7 ceiling to provide pricing stability and protect consumers.

8 In other words, nuclear would get the same credit as tier 1

9 renewables, but unlike tier 1 renewables, the tier 3 credit

10 price will never go above $8.

11 The tier 3 program would be open not just to

12 nuclear, however. Solar, wind, low-impact hydro, and

13 geothermal energy could all be compensated under tier 3 or

14 one of the other tiers, just not both. Applicants will

15 have to demonstrate that Pennsylvania's environment would

16 be negatively impacted if the resource were to cease

17 operation or, in the case of a new resource, if that

18 resource failed to come into service.

19 The Pennsylvania Public Utilities Commission

20 would rank all of the qualifying resources on this basis

21 and will select applicants up to the point at which the

22 combined sum of the megawatt hours equals approximately 50

23 percent of the electricity distributed by the electric

24 distribution utilities in the State. Participating

25 resources would have to commit to operating for at least 30

1 six years and would be prohibited from participating in any

2 similar program in another State.

3 In closing, as Pennsylvania and the country

4 transition to a cleaner energy future, we overlook the

5 importance of nuclear at our peril. Many scientists now

6 agree no other energy source can provide around-the-clock

7 carbon-free power on the scale necessary to meet the

8 climate challenges that we face. Closure of these

9 facilities will increase your constituents' electric bill,

10 create a generation portfolio dominated by single fuel

11 source, eliminate any possibility of achieving the

12 Commonwealth's Stated environmental goals, eliminate 16,000

13 highly skilled jobs, and represent a loss of economic

14 vitality for many of our communities. This body is the

15 only entity that can prevent this outcome, and we urge you

16 to do so.

17 Thank you for your time and for your attention.

18 MAJORITY CHAIRMAN ROAE: All right. Thank you

19 for your testimony. There's a couple other people at the

20 table if you'd like to introduce yourselves, please.

21 MS. RAGGIO: Certainly. Debra Raggio, Senior

22 Vice President of Talen Energy over Regulatory and External

23 Affairs.

24 MS. BARRON: Good morning, Kathleen Barron,

25 Senior Vice President for Government Affairs with Exelon. 31

1 MAJORITY CHAIRMAN ROAE: Okay. And I just want

2 to remind the audience and people on TV copies of the

3 testimony -- there might be some more copies on the table

4 up here to my left, but then also you can go to the PA

5 House GOP.com website, and after the hearing there'll be an

6 electronic version of the copies of the testimonies there.

7 We're going to start with questions now, and I

8 ask the Members to please be very brief with questions.

9 We're here to hear the testifiers, not ourselves. So we're

10 going to start with the Democratic Chairman, Representative

11 Matzie.

12 DEMOCRATIC CHAIRMAN MATZIE: Thank you, Mr.

13 Chairman, and thank you, panel, for participating here

14 today. I think it's important for us to hear this.

15 Before I ask my first question, let me just say I

16 don't think that's anybody is taking this issue lightly,

17 including myself. When I agreed to be a Co-Chair of the

18 Nuclear Caucus two and a half years ago, showed my

19 commitment to get educated, to learn, and to hopefully come

20 up with a solution that makes sense for the Commonwealth of

21 Pennsylvania. As this process has gone on, obviously more

22 questions have come up, and as we have tried to address

23 what could work from a legislative perspective and to get,

24 as I like to say, 102, 26, and a signature, and that still

25 remains to be seen as far as the difficult process as 32

1 policymakers that we will be faced with.

2 The question that continually comes up to me from

3 detractors of this as stakeholders have been in the

4 revolving door that is 121 Irvis Office Building has been

5 the projections are this bill would raise about $500

6 million a year. What we don't know yet is how much each

7 plant needs. And that question was asked again to me this

8 morning and again over the weekend and how much everybody

9 needs.

10 Obviously, Beaver Valley is close to my heart

11 because it's directly at the border of my district, and the

12 vast majority of the people that work there live in my

13 district. Do we have a number yet? Do we know -- because

14 we're going to rely on the PUC to come up with a formula or

15 ranking, et cetera, to determine what plants need because

16 some media reports are saying TMI needs 500 million

17 themselves. So if this is only going to raise $500

18 million, that raises a tough question for us as

19 policymakers to answer. Is it enough? Are we doing

20 enough? So I don't know who wants to jump in and address

21 that and see if they can answer that.

22 MS. RAGGIO: Well, I can't really answer what

23 each company needs. I'm speaking from Talen's perspective.

24 MAJORITY CHAIRMAN ROAE: Sure.

25 MS. RAGGIO: But this legislation was never 33

1 needs-based legislation. It was legislation based on

2 paying for an attribute that was produced. I can say from

3 Talen's viewpoint right now, today, Susquehanna, our

4 station, which is owned 10 percent by Allegheny, it is

5 making money. It is not in need base. We have not

6 announced a shutdown. But if you look at projections, it's

7 on that trend. And if you even look at the Market Monitor,

8 State of the Market Report March 15th, it shows a drastic

9 reduction even through 2021 in Susquehanna's revenues.

10 But we would not have supported this legislation

11 if it was needs-based or a bailout. It is putting us on a

12 level playing field with what other zero-carbon producers

13 are getting of electricity. And for 16 years now or 15

14 years we have not been paid that, yet we're providing the

15 same electricity and the same, you know, attribute to the

16 State of Pennsylvania.

17 So with respect to need, I don't think we would

18 be in a position to say right now there's a need. It's

19 more of a payment for what you're providing. If you pay

20 for one or two that are going to shut down, I think you're

21 going to see it exacerbated, and then people will be coming

22 in on a one-off asking to be paid off to keep from shutting

23 down, and I don't think that's good policy.

24 MR. RIDGE: Okay. And Chairman, if I might

25 respond, I think you've hit on a very critical question. 34

1 And I say that those who would be opposed to this would

2 point to a plant or two or today's profitability, but this

3 is really a policy question for the Legislature and the

4 Governor. This is about the future of electric generation,

5 electricity generation in the Commonwealth of Pennsylvania.

6 It's about reducing and ultimately relying on one or two

7 sources. Is it about saying that we were just going to

8 dismiss 93 percent of the carbon-free electricity

9 generation? So it's not about TMI, it's not about any

10 individual plant. And I would just say to you that under

11 any and all circumstances when we deregulated back in the

12 mid-'90s, we weren't interested in creating a monopoly for

13 anybody. And all of a sudden we keep chipping away at

14 nuclear and who knows where coal is going to be.

15 And I'm an all-in advocate for energy. I want

16 solar, I want wind, I want hydroelectric. But you keep

17 chipping away, and then the margin of vulnerability expands

18 while the number of producers is reduced, and so I think

19 you really need to take a look at this. My perspective,

20 one, in the future; two, beyond individual plants or

21 individual companies like Exelon or FirstEnergy; and three,

22 what kind of resiliency, reduction of vulnerability,

23 safety, security, and national security infrastructure do

24 we want to have in Pennsylvania? It's a great question.

25 DEMOCRATIC CHAIRMAN MATZIE: Thank you. You 35

1 know, and I'll let other Members ask more questions if we

2 have more time at the conclusion. I'll help fill in the

3 time.

4 MAJORITY CHAIRMAN ROAE: All right.

5 Representative Mackenzie.

6 REPRESENTATIVE MACKENZIE: Great. Well, thank

7 you, Mr. Chairman. And thank you to all of our panelists

8 who are joining us here today. I appreciate the different

9 perspectives you bring from all of your different fields of

10 expertise. So I again want to thank you, and I share in

11 your belief that nuclear energy is an important issue for

12 Pennsylvania from energy and environmental issues to

13 economic issues, national security issues. We heard about

14 all of these things, so I share that.

15 I want to build on the question that Chairman

16 Matzie brought up about the implications of the legislation

17 and the potential $500 million shift from ratepayers to

18 other interested stakeholders. So it would be helpful for

19 those that are advocating for support of this legislation

20 to understand what your financial interests are or what the

21 benefits would be.

22 So I'd like to go right on the line, start with

23 Commissioner Pries. I appreciate you talked about some of

24 the implications for Dauphin County, what that would be.

25 Now, it's my understanding that TMI has announced that they 36

1 are starting the decommissioning process. They announced

2 that on Friday. So with that in mind, what does that mean

3 for Dauphin County in terms of do they continue to pay

4 property taxes even if they do ultimately decommission -­

5 they announced -- or least I saw in news reports some

6 scale-down of jobs. So can you specifically talk about

7 those impacts of that decommissioning decision and what

8 that would mean?

9 MR. PRIES: Well, at this point it was a press

10 release and an early announcement, so we're taking this day

11 by day, week by week and having meetings to discuss the

12 formal implications of what you just said.

13 REPRESENTATIVE MACKENZIE: Okay. So, I mean,

14 again, I was hoping you might have an answer, but maybe you

15 can get back to the Committee so that we can gain an

16 understanding because, again, I understand it's early in

17 the process, but they have announced that. So what does

18 that mean in terms of property taxes, et cetera, for the

19 county, school districts, other interested local government

20 stakeholders would be helpful.

21 MR. PRIES: Thank you, sir.

22 REPRESENTATIVE MACKENZIE: Thank you. Governor

23 Ridge or Secretary Ridge, I appreciate you being here as

24 well. You're listed as former Governor and first Secretary

25 of Homeland Security on our agenda. Do you have any 37

1 financial implications? Are you being compensated or is

2 Ridge Policy Group being compensated by anybody who has a

3 stake in this to benefit?

4 MR. RIDGE: No. First of all, I think that's a

5 legitimate question, and I want to make sure you ask it of

6 everyone, okay?

7 REPRESENTATIVE MACKENZIE: Yes.

8 MR. RIDGE: Secondly, you should know, if you

9 know my background, I happened to be on the board of Exelon

10 many, many years ago. But more importantly, you should

11 know that I had this interest in nuclear energy,

12 diversified energy infrastructure, reliability long before

13 I left either the Department of Homeland Security or during

14 my time as Governor. It's reflected in the deregulation we

15 did in the mid-'90s. I've always been a strong believer of

16 a diversified portfolio, of energy generation. I've always

17 believed in the PJM giving the opportunity for those to

18 purchase on a competitive basis.

19 I've also always believed in fairness, and you've

20 got 16 sources of carbon-free energy that are getting some

21 support. There's a 17th source that's nuclear. It's not

22 getting recognized because of that.

23 I also think you would know if you look back at

24 my background that I appreciate the diversity of energy and

25 the need to keep family-sustaining jobs in a business- 38

1 friendly network. You also know that if you look at the

2 deregulation, we never wanted to create an environment

3 where it would shrink the number of sources of energy. We

4 want competitive markets and competitive markets need

5 multiple sources of generation, so it's a fair question. I

6 just hope you ask it of everybody.

7 REPRESENTATIVE MACKENZIE: Absolutely. I mean, I

8 think the other individuals, they are listed with their

9 current professional occupations, so I just didn't know

10 what, again, your -­

11 MR. RIDGE: It's fair.

12 MAJORITY CHAIRMAN ROAE: Representative

13 Mackenzie -­

14 MR. RIDGE: Absolutely.

15 MAJORITY CHAIRMAN ROAE: -- we still have several

16 Members that want to ask questions, so we'll come back if

17 we have more time, but we're -­

18 REPRESENTATIVE MACKENZIE: Sure.

19 MAJORITY CHAIRMAN ROAE: We're going to have to

20 move on. Just for the interest of the audience, we're

21 alternating between Republicans and Democrats asking

22 questions, so we want to be fair. Representative Neilson.

23 REPRESENTATIVE NEILSON: Thank you, Mr. Chairman.

24 Thank you, ladies and gentlemen, for coming here before the

25 Committee today. 39

1 As a quick disclaimer, since we're putting

2 disclaimers out, I am a card-carrying member of the

3 International Brotherhood of Electrical Workers, and so I

4 want to make certain that labor comes to the forefront in

5 all of these conversations and these good jobs that we

6 provide.

7 Couple questions, Mr. Pries. I hope those 500

8 people you called lived in my district because I am a

9 cosponsor on this bill, and I have no issues. If I do,

10 I'll be seeing you next year looking for employment. I try

11 and lighten it up a little bit. This is a serious issue

12 that we have to consider, and I want to tap -- we're

13 talking about perspectives here, and I have questions for a

14 few of you.

15 Governor, thank you for coming. Thanks for your

16 service to the country. You've done great things in your

17 career. And you went through the deregulation. You worked

18 both in Federal and State Governments for your entire

19 career and life.

20 The FirstEnergy experience, the Exelon

21 experience, and you've talked about in your testimony about

22 this is happening all over the country. It is the job of

23 the U.S. Department of Energy to oversee a lot of the stuff

24 we do with nuclear energy, and in Mr. Griffing's testimony,

25 he even said, he said this is just going to buy us time for 40

1 the Feds to do their job. Should our taxpayers have to

2 foot the bill for the Feds to do their job, I mean, because

3 that's what we're asking them to do? And I just want your

4 perspective on it because this is something that the

5 Federal Government should be handling and they're not -­

6 MR. RIDGE: Well, listen -­

7 REPRESENTATIVE NEILSON: -- is my perspective of

8 it. I'd just like to get yours.

9 MR. RIDGE: I think it's an excellent

10 perspective. I certainly share that point of view. It

11 would be nice if the Federal Government would do its job.

12 We leave that and the editorial comments aside in response

13 to your question.

14 As I've seen the economic studies of House Bill

15 11, there are two potential cost increases associated with

16 the elimination of nuclear generation in Pennsylvania, the

17 highest cost increases associated with its elimination.

18 And there will be -- I think I saw it's $1.71 a month for

19 the average ratepayer as opposed to much higher, maybe even

20 double if there's another. Again, it depends on the

21 studies you see. But I would even ask you this. Is it

22 worth it to the Commonwealth and individual citizens to

23 have a diverse energy resource to continue to build on the

24 assets that sustain these great jobs to provide both

25 employment opportunities and growth opportunities in 41

1 Pennsylvania, continue to support.

2 And again, I think sometimes we focus in on one

3 company or two. There's a synergy between the nuclear

4 industry, the Department of Energy, the Department of

5 Defense, the academic community, and the list goes on and

6 on. And preserving the nuclear energy, I agree with you.

7 I wish the Department of Energy would do something

8 significant. But I think one of the reasons you're seeing

9 -- Ohio is working on it, New York did, Illinois did, other

10 States are doing it is because you can't wait for the

11 Federal Government to work. And if it's five or six years

12 from now and who knows when it'll be, we may not have these

13 facilities in Pennsylvania.

14 So in response to an excellent question, I say

15 let's preserve the assets that we have, build on them. In

16 the same time I think there's a growing momentum within the

17 Federal Government to do what it should have done a long

18 time ago. I'm just a big strong proponent of nuclear

19 energy, and I think for safety and security reasons and

20 sustainability reasons and avoiding future monopolies or

21 oligopolies within energy, I think you've got to keep

22 nuclear at the forefront.

23 REPRESENTATIVE NEILSON: A quick follow-up -­

24 MAJORITY CHAIRMAN ROAE: I'm sorry -­

25 REPRESENTATIVE NEILSON: -- Mr. Governor, this 42

1 is -­

2 MAJORITY CHAIRMAN ROAE: We don't have time for

3 follow-ups. We will have several -­

4 REPRESENTATIVE NEILSON: I -­

5 MAJORITY CHAIRMAN ROAE: -- people. I apologize,

6 but please try to keep your questions brief, Members.

7 Next is Representative Mehaffie, and then this

8 panel has five minutes and 14 seconds left.

9 REPRESENTATIVE MEHAFFIE: Thank you, Mr.

10 Chairman. And I will make this quick. I promise that.

11 I'm glad everybody came here to hear about my bill. I

12 think this is really great.

13 So, anyway, Kathleen, you testified before in

14 front of the Nuclear Energy Caucus, and I just wanted to

15 hit on this real quick. Can you explain why those that

16 profit from the flawed wholesale power design are opposing

17 this legislation? I mean, I know we touched on it briefly,

18 and I know we talked about before and you were I think the

19 one that talked about it when I first got on the Nuclear

20 Energy Caucus, but I think it's really important that we

21 talk about this. Thank you.

22 MS. BARRON: Thank you, and I appreciate the

23 question because I think it goes to Chairman Roae's

24 comments at the beginning of this hearing. You're hearing

25 from both sides that prices are going to go up no matter 43

1 what you do, so what would you do with that? And I think

2 it's important to look at what happened when this happened

3 in other States. We've heard about New York, Illinois, New

4 Jersey. I was involved in all of those cases, and I had

5 the opportunity to appear before Legislatures and Members

6 like yourselves who were trying to figure this out.

7 But I want to tell you what happened when this

8 type of policy was enacted in New York. There it wasn't

9 legislated. It was a regulatory decision, and the

10 Commission was convinced that it would be better for

11 consumers if the plants stayed in operation from a cost

12 perspective, environmental, GDP impact. Every way they

13 looked at it, the numbers added up that customers were

14 better off. But the fossil generators didn't like that

15 outcome and they went to court, and that's where the rub is

16 because in order to appear before a court, you have to have

17 standing. You have to say how you're harmed. So they told

18 the court in New York that if the State had not acted to

19 include nuclear within the clean energy standard, that

20 prices would have gone up by $15 billion over the 12-year

21 period of that law. There were losing money because prices

22 would go up if the States had let the plants shut.

23 And that is the difference here is that they're

24 here because they do not want to see prices stay low, and

25 they stand to benefit in terms of price and market share if 44

1 you don't act.

2 MAJORITY CHAIRMAN ROAE: All right. Our next

3 question is from Representative Flynn.

4 REPRESENTATIVE FLYNN: Thank you, Mr. Chairman.

5 My question is for Pennsylvania Rural Electric

6 Association. Lackawanna Energy Center and Venergy's gas-

7 fired combined-cycle plant is right outside my district,

8 and that has the capacity to power over one million homes

9 with local sourced energy. It was constructed at the hands

10 of almost 800 skilled laborers from all across, making

11 energy costs much cheaper for my constituents. Now you're

12 telling me that my constituents need to pay more to

13 subsidize a corporate machine that in 2018 made $640

14 million.

15 While you tell this Committee how important

16 industry is and how we need to support it, House Bill 11

17 explicitly exempts your rural co-op members from this

18 mandate that will drive up costs for my constituents. How

19 do you expect Members like me to support legislation that

20 costs our constituents more?

21 MR. BRAME: No, I appreciate the question,

22 Representative Flynn, and I'll just go back to my testimony

23 on that specific subject. Our electric cooperatives are

24 not public utilities. They are not-for-profit electric

25 cooperatives. We are in fact exempt from the Alternative 45

1 Energy Portfolio Standard and explicitly will not be

2 subject to the non-bypassable charge that's contemplated in

3 House Bill 11. And I might suggest that that makes perfect

4 sense when you consider we are the Pennsylvania residents

5 who are paying for the nuclear energy already. We are the

6 Pennsylvania owners of nuclear energy. Our consumer

7 members, 600,000 consumer members in rural Pennsylvania,

8 have been investing in nuclear power and in carbon-free

9 energy for 3 0-plus years. So no, we would not be subject

10 to the non-bypassable charge very simply because we are

11 already paying for it.

12 MAJORITY CHAIRMAN ROAE: All right. With one

13 minute left for this panel, Representative Nelson will ask

14 a very brief question.

15 REPRESENTATIVE NELSON: Thank you, Mr. Chairman.

16 Thank you. And I appreciate the testimony.

17 MALE SPEAKER: Hopefully, you'll get a very brief

18 answer.

19 REPRESENTATIVE NELSON: Yes. In the world of

20 disclosure, I too work and have worked, our company, on

21 nuclear facility outages, and I would say that, you know,

22 our time on those outages exceeds that four to six weeks,

23 you know? But I also am very concerned with the two plants

24 at about three million manhours apiece that have projects

25 for natural gas that have been put on hold. 46

1 You know, I appreciate the disclosure for the

2 other bodies, and it's my understanding, you know, I am

3 very respectful of your service to the Nation, sir, but the

4 Ridge Policy Group may have additional interests in -­

5 MR. RIDGE: Oh, yes, they're doing work with

6 FirstEnergy.

7 REPRESENTATIVE NELSON: Yes. So as a former

8 member of the Exelon board and, you know, currently -­

9 MR. RIDGE: Sure.

10 REPRESENTATIVE NELSON: -- a client -- but when

11 you had mentioned the national -­

12 MR. RIDGE: I would tell you that -­

13 REPRESENTATIVE NELSON: -- sir, when you had

14 mentioned the national security complications -­

15 MR. RIDGE: Yes.

16 REPRESENTATIVE NELSON: -- if the United States

17 -- and I do agree that's a Federal issue. But if we

18 receive 93 percent of our uranium from Russia and Exelon, a

19 company of which you sat on the board, has petitioned the

20 Federal Government to be able to get their nuclear fuel

21 from Russia, is it really in our best interest to take and

22 limit the opportunity to use Pennsylvania fuel for that?

23 And the second part of the concern for the

24 FirstEnergy side is Exelon has disclosed that their

25 intention is to store their nuclear waste on-site and their 47

1 spent fuel in an independent spent-fuel storage facility

2 which will be held on-site until 2073. Is it FirstEnergy's

3 intention -­

4 MAJORITY CHAIRMAN ROAE: Representative -­

5 REPRESENTATIVE NELSON: -- to store that energy

6 onsite as well?

7 MAJORITY CHAIRMAN ROAE: Representative Nelson,

8 Representative Nelson, the time's expired for this panel.

9 We're going to let the panel answer the question -­

10 MR. RIDGE: If I could.

11 MAJORITY CHAIRMAN ROAE: Yes, go ahead.

12 MR. RIDGE: First of all, I appreciate the fact

13 that you are sensitive to those who testify at any time

14 before any Committee on any issue may have interests, so

15 let's be very clear. I was proud to serve on the board of

16 Exelon, but my views with regard to nuclear energy and its

17 importance to Pennsylvania and the country were formed long

18 before I joined the board, else I wouldn't have accepted

19 the invitation.

20 FirstEnergy is clearly a client of the Ridge

21 Policy Group. We don't apologize for it. We believe in

22 its possibility -­

23 REPRESENTATIVE NELSON: They're a great company,

24 absolutely.

25 MR. RIDGE: -- and so I just want to make that 48

1 very clear. I don't back away from that, and I think it's

2 a very appropriate question, by the way.

3 Secondly, you know, we don't have uranium

4 deposits in Pennsylvania, so we're not going to be mining

5 for them here. I think we might get 7 0 percent -- your

6 information is pretty correct. I think we get 70 percent

7 of uranium from domestic sources, but I think a large

8 measure of it comes from our friends in Canada, not Russia.

9 Now, admittedly, Russia has quite a bit of uranium, but

10 notice how they've used natural gas as a weapon as they try

11 to deal with a monopoly as they tried to deal with Western

12 Europe, Ukraine, and Eastern Europe.

13 So I have the interest that I have, the legacy

14 that I have. There is no uranium in Pennsylvania to be

15 mined, and I think we get the majority of it from our

16 friends in Canada, and that's a great relationship. And

17 that's a border that I think is -- and a relationship that

18 I think is worth keeping because it's a great value to us

19 as a country, and nuclear energy is a great asset for this

20 country, and we can't let it go.

21 And the question was earlier asked. I wish the

22 Federal Government would get its act together on this and

23 other issues. They haven't, and until they do, the States

24 have to act. That's why it's such an important policy

25 question and that's why I thank you, Chairman Roae, for 49

1 taking it on in such an ambitious way. Thank you very

2 much.

3 MAJORITY CHAIRMAN ROAE: All right. Well, thank

4 you, panel, for your testimony.

5 At this time, the first panel is going to, you

6 know, vacate the table as the second panel prepares to be

7 seated. And during this little transition I want to remind

8 people again if you go to the website, PAHouseGOP.com

9 shortly after the meeting there will be an electronic copy

10 of the testimony. Also on the table up front there might

11 be leftover copies of the testimony.

12 So if the other panel could please work their way

13 to the table.

14 And I would like to remind the Members to please

15 try to summarize your question in about a 30-second

16 question so we can get through and allow all the Members

17 that want to ask questions, ask questions. Try to keep it

18 a very, very brief question. We're here to hear the people

19 testifying.

20 All right. This panel is going to be Kevin

21 Sunday from the PA Chamber of Business and Industry, Glen

22 Thomas from GT Power Group, Todd Snitchler from American

23 Petroleum Institute, and Desiree Hung of AARP. If you're

24 ready, you may begin your testimony.

25 MR. SUNDAY: Well, thank you, Chairman Roae, 50

1 Chairman Matzie, Members of the Committee. My name is

2 Kevin Sunday, Director of Government Affairs for the

3 Pennsylvania Chamber of Business and Industry. The PA

4 Chamber is the largest broad-based business advocacy

5 organization in the Commonwealth, and we have been

6 consistent in our support for competitive markets and

7 consumer choice. We have also taken strides over the years

8 to support both energy users and energy producers,

9 including coal, oil, gas, renewables, and nuclear.

10 Specifically as it relates to nuclear, these

11 strides include supporting relicensing of Peach Bottom,

12 securing changes to DEP storage tank regulations at nuclear

13 facilities, advocating military bases overseas look to

14 nuclear as an alternative to Russian-sourced natural gas,

15 arguing in front of Congress the Obama Administration's

16 draft Clean Power Plan did not appropriately recognize

17 nuclear for its role in securing emissions reductions, and

18 supporting a change to PJM's pricing roles, which will have

19 the effect of increasing energy prices paid to generators.

20 In addition, the PA Chamber was a cosponsor of an

21 economic report which estimated the economic and

22 environmental value of Pennsylvania's five nuclear power

23 plants. However, it's important to note that that report

24 was premised on a situation if all five plants were to

25 shutter at the same time. 51

1 With this being said, the PA Chamber cannot

2 support House Bill 11. This legislation is in clear

3 conflict with our organization's energy policies, which are

4 developed and approved by a Board of Directors whose

5 membership comprises executives from companies of all sizes

6 and industrial categories, including the energy industry.

7 In part, our energy policy directs us to support

8 legislation that encourages competition in electric

9 markets, allows individual companies to select the most

10 appropriate energy source that meets their needs and goals,

11 and avoids government actions that select, force, or

12 subsidize particular energy resources. Government policy,

13 as it relates to energy and the environment, should be

14 technology-neutral.

15 The PA Chamber opposed the creation of the

16 original Alternative Energy Portfolio Standards Act in

17 2004, which it must be noticed did not assign credits to

18 particular resources for their greenhouse gas avoidance but

19 because they were government-decided technologies. We

20 opposed that legislation out of concern for the cost it

21 would impose on ratepayers and that it would distort the

22 market, as it very clearly has. And we therefore cannot

23 support a massive expansion of costly energy mandates.

24 House Bill 11 will impose significantly higher

25 costs on ratepayers, stifle innovation, erode competitive 52

1 markets, and diminish Pennsylvania's ability to attract new

2 investment. This bill adds a 50 percent mandate to the

3 existing alternative energy mandates for total of nearly 70

4 percent of the markets subject to government mandates. The

5 total cost will depend upon implementation but can be

6 estimated to be between $500-600 million, and the brunt of

7 those costs will fall on commercial and industrial users

8 whose annual energy bills would increase between 5 and 15

9 percent.

10 In real dollars, this means a large hospital

11 would see annual increases of over $500,000. An energy­

12 intensive manufacturer would see costs increase by nearly

13 $5 million. Schools, colleges, and universities would see

14 higher costs as well, meaning likely higher tuition costs

15 and property taxes.

16 Given Pennsylvania's already burdensome tax

17 regulatory, legal, and labor policy climate, the

18 legislation should seriously question whether it wants to

19 give manufacturers and businesses another reason to export

20 their investment to another State, particularly given the

21 regional grid operator has analyzed outcomes in a variety

22 of scenarios and found we are not facing a reliability

23 threat.

24 As it relates to environmental attributes,

25 competition has driven improvements in conjunction with 53

1 regulation in the efficiencies of all power plants. House

2 Bill 11 erodes competitive markets to our detriment and

3 precludes the entrance of new technology into the market

4 and the continuing operation of existing fuels. New

5 technologies such as carbon capture, hydrogen, fuel cells,

6 other fossil generation, small modular reactors, batteries,

7 and other resources not yet even contemplated would face a

8 difficult market to enter in Pennsylvania should this bill

9 be passed. House Bill 11, by virtue of raising costs,

10 would preclude investment into existing industrial and

11 manufacturing facilities in the State and encourage

12 relocation or disinvestment.

13 We have been advocating as part of the Forge the

14 Future initiative that, by leveraging our energy assets, we

15 can secure 100,000 new jobs, a $60 billion increase in

16 State GDP, and a $2-3 billion increase in State tax

17 revenues.

18 Our energy assets, paired with Federal and State

19 tax and regulatory reform, should be putting us in a

20 position to be a leader in 21st century innovation and

21 manufacturing, but instead, as too often has been the case

22 over the past many years, we are focusing on the upstream

23 producers, whether they're being taxed or subsidized enough

24 and not focusing on the needs of the consumers and energy

25 users downstream. This is a policy that raises costs for 54

1 businesses and consumers, and we encourage this Committee

2 and the Legislature to instead turn their focus to enacting

3 pro-growth legislation and policy.

4 And I look forward to answering any questions you

5 may have after my co-panelists speak. Thank you.

6 MR. THOMAS: Good morning. Good morning,

7 Chairman Roae, Chairman Matzie, pleasure to be here. My

8 name is Glen Thomas. I am President of GT Power Group.

9 Just to start with a disclaimer in anticipation

10 of Representative Mackenzie's question, I am here on my own

11 behalf today and not on behalf of any GT Power clients. I

12 have clients that are in all segments of the industry. I

13 have clients that own nuclear power plants. I have clients

14 that own coal, gas, wind, solar. I have clients that serve

15 retail load. I have clients that provide demand response.

16 We're on all sides of the market as a firm, but I am here

17 today on my own behalf. My turnpike tolls that I incurred

18 this morning to come up here will not appear on any expense

19 report.

20 And I'm here today because I care about

21 Pennsylvania energy policy. I was proud to serve as

22 Governor Tom Ridge's Energy and Environmental Policy

23 Advisor for six and a half years. I was part of the team

24 that helped restructure our industry and write that

25 legislation. I spent many long hours in this room working 55

1 on that bill. I then was honored to serve on the

2 Pennsylvania Public Utility Commission for four years both

3 as Chairman and as a Commissioner. And throughout that

4 time I remained steadfast in my belief that competitive

5 markets were in the best interest of Pennsylvania.

6 In the bulk of my time since I left the

7 Commission in 2005, I've spent time traveling around other

8 States mostly arguing why those States should be more like

9 Pennsylvania and their energy policy. I have fought bad

10 ideas all the way to the Supreme Court from other States.

11 I have testified in Annapolis, Albany, Trenton, Columbus.

12 I've traveled around the world. People want to know why

13 Pennsylvania is so successful. And a big part of the

14 reason that Pennsylvania has had so much success in the

15 energy space is because of the Competition Act that was

16 passed in 1996.

17 I want to make it clear I support nuclear power.

18 There was a lot of testimony that was presented this

19 morning on the benefits of nuclear power, much of which was

20 a dead accurate. However, I do not support House Bill 11.

21 There's a huge disconnect between some of the testimony you

22 heard this morning and the actual language in House Bill

23 11. House Bill 11 is a big deal. It's a very complicated

24 piece of legislation. I've been doing nothing but energy

25 policy for the last 25 years. I've probably read this bill 56

1 a dozen times, and each time I read it, I pick up something

2 new. There's a lot of nuance to it, a lot of details. It

3 was written by some very, very seasoned folks in the energy

4 space. I urge you to go slowly on it because there's

5 enormous implications buried throughout the bill.

6 This is not a simple bill that just simply

7 expands the State's AEPS program to include a resource that

8 should have been included in 2004 or whenever the AEPS was

9 passed. This is a major change, a major shift in

10 Pennsylvania's energy policy from basically a policy that

11 puts consumers in the driver's seat to one that puts the

12 policymakers of Pennsylvania in the driver seat by

13 dictating where Pennsylvanians are getting their energy

14 from.

15 If passed, 68 percent of the resources consumed

16 in Pennsylvania would come from specified resources. And,

17 by the way, not all of them are carbon-free. If you

18 actually look at the AEPS Act and read the reports that the

19 Pennsylvania Commission produces, over half, over half of

20 the subsidized resources in today's existing AEPS program

21 produce carbon. I would venture to say over half of those

22 resources are also out-of-state.

23 There are issues associated with today's AEPS

24 program that deserve examination by the Committee. I would

25 love to come back and talk more about the existing AEPS 57

1 program that's on the books before we even think about

2 expanding it.

3 I urge this Committee to go slowly. There is a

4 lot to consider in this bill, and it really undoes a lot of

5 the hard work that it took to get here, 20 years of

6 bipartisan support for competitive markets landed

7 Pennsylvania in an enviable position where our rates are

8 about 30 to 50 percent below our neighboring States' rates.

9 Our State that was once 15 to 20 percent above the national

10 average are below the national average.

11 I have to correct Governor Ridge on a couple

12 points, but he said that the electricity restructuring act

13 has saved millions. It has saved billions, folks. Our

14 consumers, our ratepayers have saved billions of dollars as

15 a result of this act, and guess what, we've seen billions

16 of dollars in investment. The reference was made to the

17 facility in Lackawanna County. We've seen 13 new

18 facilities that have been built throughout this State in

19 the last 10 years alone, many of them employing IEBW

20 workers as part of the process. So this has been a jobs

21 producer. It's been a very solid piece of legislation, and

22 it's produced terrific results.

23 When I look at, you know, Pennsylvania and where

24 we stand now compared to where we were in 1986, our rates

25 are lower, our reliability is better, our grid is more 58

1 diverse today than it was in 1996, and air emissions are

2 down whether it's NOx, SOx, particulate matter, even

3 carbon. All those pollutants are lower today than they

4 were in 1996, so we've seen tremendous progress under this

5 act that I would not want to throw away for sure.

6 I submitted written testimony. In my written

7 testimony I outlined some of the steps it took to get here.

8 But let's face it, it has been a long, hard struggle. We

9 endured polar vortexes, we endured hurricanes, we endured

10 changes at the Federal level, all of which Pennsylvania

11 endured and, like I said, 20 years with the PUC

12 Commissioners and the terrific staff at the PUC has done

13 yeoman's job, yeoman's work implementing this act to put

14 Pennsylvania in this position. It took us 10 years to

15 transition to competitive markets. It cost our consumers

16 $12 billion in stranded costs. It should not be taken

17 lightly how hard it was to get where we are.

18 And then I look at House Bill 11, which is an

19 absolute competition killer. And while I hear what

20 Governor Ridge is saying, that the market clears every five

21 minutes and that we'll continue to be a competitive market

22 in that respect, let me put it in the simplest terms

23 possible. If Kevin is producing energy at 5 cents and Todd

24 here is producing energy at 4 cents, in a competitive

25 marketplace, Todd's energy is going to get used can't 59

1 Kevin's is not. However, if the State comes along and

2 subsidized Kevin's energy so that it reduces his cost to 3

3 cents, he is now going to get dispatched and Todd is not.

4 Yes, it's still a clearing auction, yes, it's still a

5 competitive market, but the State just put, you know, the

6 thumb on the scale for a specific resource. And House Bill

7 11 does that for 68 percent of the delivered megawatts in

8 the State if approved. And, oh, by the way, there's a

9 provision in House Bill 11 that could expand that to 100

10 percent if certain changes are made at the Federal level.

11 This is a very complicated bill, folks, that

12 deserves a lot of time to be better understood. And when I

13 listen to the reasons for doing this, when I listen to the

14 reasons -- you know, and I think there's a terrific

15 discussion to be had in Harrisburg about carbon. This

16 General Assembly, this State is ready for a carbon

17 discussion. And yes, there is more that can be done at

18 this level to reduce carbon.

19 And when I look at all the pollutants that have

20 emerged or been produced from the energy space, like I

21 said, whether it's sulfur, mercury, lead, particulate

22 matter, NOx, all these pollutants have been addressed in a

23 way that does not destroy the competitive marketplace.

24 It's been done so in market-neutral ways that have allowed

25 competition to flourish. We should have a similar 60

1 conversation about carbon. I guarantee you there are

2 better, cheaper, more efficient, more effective ways to

3 regulate carbon in this State than House Bill 11. I would

4 love to have that conversation. We don't have enough time

5 today, but I really would love to come back and have that

6 conversation.

7 I would like to add one thing, and it relates to

8 the remarks of the County Commissioner. I actually am very

9 sympathetic to the impacts at the community level from the

10 closure of any power plants, whether it's a coal facility,

11 a nuclear facility, or anything. And the communities that

12 have hosted these power plants have endured a certain

13 burden on behalf of their fellow Pennsylvanians that

14 deserves to be recognized, particularly as those plants

15 close. And other States have taken a look at this and

16 actually done things. I point you to New York that has

17 created a transition program for States transitioning away

18 from existing power plants. And I think similar things can

19 be done here.

20 But what I cannot support is opening up a $500

21 million program -- this is $500 million every year. I

22 mean, this is $5 billion over 10 years. This is a lot of

23 money. You know, I appreciate the fact that, you know, I

24 think you said it was $1 million that they pay in property

25 taxes, but there's better ways to address Dauphin County's 61

1 problem and Goldsboro's problem and Middletown's problem

2 and I think it's the Central Dauphin School District's

3 problem than creating a $500 million program that dictates

4 where 68 percent of the energy consumed in this State comes

5 from. And, like I said, there's provisions in there that

6 could expand that to 100 percent.

7 This is not an all-of-the-above energy policy.

8 This is a command-and-control energy policy that is being

9 put forth in House Bill 11. I urge the Committee to take a

10 good hard look at this bill, understand what it really

11 represents, and invite a thoughtful conversation so

12 Pennsylvania can continue to remain in the vanguard of

13 energy policy throughout the country and the world.

14 MR. SNITCHLER: Good morning, Chairman Roae,

15 Chairman Matzie, and Members of the House Consumer Affairs

16 Committee. My name is Todd Snitchler, and I am the Vice

17 President of Market Development at the American Petroleum

18 Institute. In the interest of disclosure, since we're

19 going to get the question anyway, prior to joining API, I

20 was elected two terms to the Ohio State House as a State

21 Representative in the Ohio General Assembly and was also

22 appointed Chair of the Ohio Public Utilities Commission

23 where I served from 2011 to 2014. Since returning to the

24 private sector, I've represented independent power

25 producers, competitive energy suppliers, and technology 62

1 companies working in the energy and utility space prior to

2 joining API.

3 A little background about API, we are the only

4 national trade association representing all facets of the

5 oil and natural gas industry, which supports 10.3 million

6 jobs and 8 percent of the United States' economy. API's

7 more than 625 members include large integrated companies,

8 as well as exploration, production, refining, marketing,

9 pipeline, and marine businesses, and supply and service

10 firms. As Vice President of Market Development, I am

11 responsible for natural gas issues, including those that

12 are related to the use of natural gas for power generation.

13 Also, it's important to note that API's

14 Pennsylvania affiliate is a member of the Citizens against

15 Nuclear Bailouts Coalition, a diverse coalition of over 20

16 members representing citizens group to power generators and

17 energy business and manufacturing associations. My

18 comments today, however, represent the views of API and do

19 not represent the views of any other organization.

20 I want to thank you for the opportunity to

21 provide testimony in House Bill 11, but before discussing

22 our concerns with the bill, I briefly want to highlight the

23 role that natural gas has played in the U.S. since the turn

24 of the century and the role that the U.S. has played in the

25 global oil and gas market. 63

1 We currently lead the world in production of

2 natural gas and oil, and at the same time we are the global

3 leader in the reduction of carbon dioxide emissions.

4 Additionally, carbon dioxide emissions from electricity

5 generation have declined 28 percent since 2005 and are at

6 their lowest level in nearly 30 years. About 50 percent of

7 the decrease in power generation related CO2 emissions

8 since 2005 was due to fuel switching to natural gas.

9 It's significant to note that the development of

10 new natural gas-fired resources in Pennsylvania has

11 resulted in Pennsylvania's carbon dioxide emissions falling

12 to levels that would now meet the repealed Clean Power Plan

13 without a government mandate.

14 My colleagues on the panel talked about the

15 success of restructuring and what has happened in other

16 States, but allow me to offer a couple of observations.

17 The intended benefit of restructuring was to shift the risk

18 of large investments in generation resources from utility

19 customers to utility shareholders. It's important to note

20 that, before restructuring, Pennsylvania's electricity

21 rates were 15 to 20 percent higher than the national

22 average, and now they are paying less than the national

23 average, as my colleague has noted.

24 In addition, in order to ensure that commitments

25 previously made by regulated utilities under the vertically 64

1 integrated model did not cause financial harm to those

2 owners, those utilities were allowed to request and receive

3 stranded cost recovery for assets that had not been fully

4 depreciated. According to a June 17 study by Daymark

5 Advisors, total stranded cost in Pennsylvania ended at

6 about $11.6 billion with $8.6 billion related to stranded

7 nuclear costs, meaning consumers have already paid over $8

8 billion to subsidize nuclear plants in Pennsylvania. Many

9 would argue that restructuring brought a new level of

10 discipline to the electricity market and forced suppliers

11 to compete for service with natural gas and renewables

12 leading the way in new builds.

13 At the same time, natural gas prices have sharply

14 decreased over the last decade. Prices that had been as

15 high as $15 per MMBtu have dropped to below $3 per MMBtu on

16 an average annual basis, and the price volatility of

17 natural gas from 2010 through 2018 fell by half relative to

18 those from the period 1997 to 2009.

19 So responding to this shift, along with consumer

20 demand for cleaner and more flexible power, power

21 generators have turned to natural gas. This dramatic

22 change in the price of natural gas turned the power

23 production market upside down and has provided consumers

24 with dramatic economic benefits. What it has also done is

25 attract billions of dollars in private capital to 65

1 Pennsylvania from power plant developers who see

2 opportunity.

3 With regard to House Bill 11, API supports a

4 level playing field where all types of generation resources

5 are able to compete for market share, the type of playing

6 field that has led to such drastic emission reductions in

7 our country since 2005. API also believes that awarding

8 subsidies and selecting winners and losers in the market

9 disrupts effective entry and exit of economic resources,

10 resulting in an inefficient market where consumers end up

11 paying more than they otherwise ought to pay. The

12 increased use of natural gas in power generation provided

13 dramatic economic and environmental benefits to the

14 families and businesses of the Commonwealth of Pennsylvania

15 and should not be abandoned to provide subsidies to

16 profitable generation owners.

17 House Bill 11 would effectively destroy a market

18 that has encouraged innovation and recognized those who

19 have risked private capital and provided beneficial

20 outcomes without burdening Pennsylvania ratepayers. Put

21 simply, it would punish those who played by the rules.

22 Were House Bill 11 to pass, 50 percent of the market would

23 be required to buy credits from nuclear generation, making

24 nearly 70 percent of the market uncompetitive when combined

25 with the current AEPS requirement of 18 percent. This 66

1 outcome would not just distort a playing field which is

2 already suffering from subsidy distortion, it would make

3 the game unplayable.

4 The supporters of House Bill 11 have previously

5 benefited from restructuring, and they now want to mandate

6 that Pennsylvania families and businesses pay at least $500

7 million more annually to ensure that they continue to

8 receive profit margins that they deem acceptable. That

9 outcome is the worst of all worlds in creating a heads-we-

10 win, tails-you-lose scenario where profits are retained by

11 the corporation and any losses are socialized to consumers.

12 The beneficiaries of House Bill 11 also would

13 like to say that there is no market or that PJM isn't a

14 real market and this administrative construct is broken.

15 At the same time, supporters of House Bill 11 say they

16 prefer market-based solutions. What seems clear is that

17 the lack of credit -- and by that I mean payment -- for

18 nuclear powers non-emission profile means that the market

19 doesn't serve their needs. And while I will leave it to

20 PJM to defend its market, I'll offer the following points

21 to consider.

22 As presently constructed and you previously

23 heard, the PJM market seeks to deliver reliable power at

24 lowest cost. Until nuclear generation owners stop making

25 returns they desire due to competition from low-cost 67

1 natural gas, the complaints about a broken market were

2 nonexistent. At the same time, policymakers must be

3 mindful of but not misled about the possible impacts to

4 local communities. Profitable plants are extremely

5 unlikely to close.

6 It's also worth noting that the recently passed

7 New Jersey legislation, out-of-state nuclear units like

8 Three Mile Island were and still are eligible for ZEC

9 payments to subsidize that unit and have New Jersey

10 ratepayers pay the bill.

11 Second, plants out of the money like Three Mile

12 Island are likely to close no matter what you do but will

13 be cast as the we-told-you-we-were-serious to force U.S.

14 policymakers to approve a bad bill. If the goal is to help

15 impacted communities, as Glen noted, there are far more

16 cost-effective ways to do that.

17 I also need to reemphasize, because it was

18 perhaps unclear at the previous panel, that API is not in

19 any way anti-nuclear. We are not leading the charge to

20 close any plants or stop construction of new plants where

21 they exist. Natural gas generation has grown tremendously

22 in Pennsylvania alongside the existing nuclear fleet. What

23 API does oppose is legislation that seeks to undo and limit

24 continued growth in natural gas generation in the

25 Commonwealth. The Legislature should not punish those who 68

1 played by the rules in the electricity market and come into

2 those who didn't like the outcome.

3 In conclusion, I'll leave you with four

4 takeaways. API supports a level playing field where any

5 resource has the opportunity to compete for market share.

6 API opposes subsidies for specific generation types.

7 Pennsylvania's natural gas and oil industry directly

8 supports over 100,000 jobs and indirectly supports over

9 222,000 jobs in Pennsylvania while accounting for 3.4

10 percent of the economy, contributions that could be greatly

11 reduced if House Bill 11 passes and reduces the ability of

12 natural gas to compete. And contrary to much of the

13 rhetoric around this legislation, in the end, this bill is

14 really about guaranteeing corporate profits.

15 With that, Mr. Chairman, I thank you for the

16 opportunity to testify and would be happy to answer any

17 questions at the conclusion.

18 MS. HUNG: Good afternoon. My name is Desiree

19 Hung, and I'm with AARP Pennsylvania.

20 Chairman Roae, Chairman Matzie, distinguished

21 panel, thank you for allowing me the opportunity to testify

22 on behalf of AARP's 1.8 million members in Pennsylvania.

23 At AARP, we believe that no one's possibilities

24 should be limited by their age, and we work to help people

25 live and age as they choose. That's why we're strong 69

1 advocates for fair and affordable utility rates and

2 reliable service. We believe consumers must have access to

3 safe, affordable, and high-quality utility service.

4 Indeed, these are lifeline services that impact the health

5 and safety of residents of all ages.

6 We're here today because we have very serious

7 concerns about House Bill 11 and its proposal to impose a

8 significant new charge on Pennsylvania's electric

9 ratepayers that would benefit the State's nuclear power

10 providers. In fact, when you take a close look at the

11 proposal, the bailout plan is nothing more than a way to

12 increase the profitability of our State's aging nuclear

13 power plants at the expense of electric consumers.

14 House Bill 11 will raise electricity rates for

15 only Pennsylvania customers even though our nuclear power

16 plants provide power to a regional grid that supplies

17 customers in 12 other States. That means Pennsylvania

18 electricity ratepayers would be paying a premium so

19 customers in other States can enjoy discounted electric

20 rates, and we believe that is just not fair.

21 It's important to note that other States have

22 ignored a bailout for nuclear power providers with no ill

23 effects on their electricity market. States, including

24 California, Vermont, Michigan, and Wisconsin, have seen

25 some of their nuclear plants close without a bailout and 70

1 have experienced no impact on reliability. PJM

2 interconnection, which runs the 13-State electric grid for

3 this region, has already completed its own analysis here

4 and concluded that a lack of a bailout plan here in

5 Pennsylvania will not impact the reliability of our

6 regional electric grid.

7 AARP also has opposed similar single-State

8 surcharges benefiting the nuclear industry in other States.

9 We believe if a surcharge or special payment is needed, it

10 should be considered on a regional basis by PJM, and that's

11 exactly what they're doing.

12 We believe the bailout included in House Bill 11

13 is completely unnecessary. Currently four of five nuclear

14 power generators in Pennsylvania are profitable and are

15 projected to make a total profit of more than $600 million

16 this year alone. In addition, those generating stations

17 are clearing the capacity PJM market, which means, too,

18 that they will remain profitable for at least the next five

19 years.

20 We're also concerned about the size of the

21 bailout. One estimate sets the price tag of a bailout at

22 $500 million, but it's important to remember that will be

23 $500 million per year for at least six years, the initial

24 term of the surcharge in House Bill 11. That's putting

25 Pennsylvania ratepayers on the hook for $3 billion, which 71

1 is far more than the previous bailouts proposed in other

2 States.

3 The current version of the bailout proposal would

4 give nuclear power plants special protections as part of

5 the State's Alternative Energy Portfolio Standards similar

6 to wind and solar power generators, but that law was

7 intended to advance the development of new and innovative

8 renewable energy technology and not bailout last century's

9 nuclear reactors that can't compete anymore in the

10 electricity marketplace.

11 To be clear, AARP is not opposed to nuclear

12 power. AARP is fuel-neutral. However, we strongly oppose

13 the imposition of a new surcharge on the backs of all

14 Pennsylvania consumers and businesses that will increase

15 their monthly bills. The proposed rate surcharge will be a

16 significant burden for consumers of all ages. Higher

17 utility bills will force many individuals and families to

18 jeopardize their health and safety by making difficult

19 choices like turning down the heat in winter, not using air

20 conditioning in summer, having to choose between paying the

21 electric bill, buying groceries, prescription medicines, or

22 paying property taxes. Low utility rates are not a problem

23 for ratepayers, but higher rates are.

24 On behalf of AARP members and consumers

25 Statewide, we are asking you to reject this costly and 72

1 unnecessary bailout. In the end, Pennsylvania utility

2 customers of all ages expect to pay fair and reasonable

3 prices for their electricity and not a dollar more. We

4 need our elected leaders to put the interests of consumers

5 above those of already-profitable nuclear power companies.

6 Pennsylvania electricity consumers deserve nothing less.

7 We thank you again for holding these public

8 hearings, and we look forward to continued robust dialogue

9 on the merits of this legislation, as well as beyond today.

10 I'll be happy to answer any questions if you have them, and

11 thank you once again for allowing me to speak here today.

12 MAJORITY CHAIRMAN ROAE: All right. Thank you

13 for your testimony.

14 We're going to start with brief questions from

15 the Members, so the first Member to ask a brief question

16 will be Representative Matzie, the Democratic Chairman.

17 DEMOCRATIC CHAIRMAN MATZIE: Thank you. And of

18 course if we have time at the end, we can ask more, right?

19 Thank you all for your testimony. Glen, I'll ask

20 you the question because your resume speaks for itself.

21 Thank you for your service also to the State when you were

22 here as a PUC Chairman and as a Member.

23 I've been throwing different ideas in my mind and

24 have mentioned at hearings, at meetings about how I would

25 love to somehow find a way to come up with a policy that 73

1 made sense for everybody. I'm for all-energy portfolio. I

2 mean, I'm from Southwestern Pennsylvania. I've got it all,

3 so I'm from an all-energy portfolio. But put your PUC hat

4 on for a second. And, granted, every State is different.

5 New York did there's different. They didn't have to go

6 through the Legislature. Illinois relies on 80 percent of

7 nukes. Every State is different, I mean, from that

8 perspective.

9 If the General Assembly would put forth a policy

10 that asks the PUC to interject and put forth some policy or

11 effort or regulation or a number on what makes sense, is

12 that something, A, they're equipped to do; and B, is that

13 something that they could actually happen and work?

14 MR. THOMAS: I mean, a couple thoughts on that.

15 I mean, first of all, I think it's important that all

16 Pennsylvanians that are served by electric utility have a

17 choice of where they get their power from. And we've seen

18 tremendous increases in the amount of people that are

19 choosing renewable power in this State, and there's good

20 reason for that. The cost of renewables have come down

21 dramatically. I mean, we're seeing grid scale solar coming

22 in Nevada at about 2.5 cents. Your default rates in

23 Southwestern Pennsylvania right now are probably around 6,

24 7 cents.

25 And indeed, there's options out there. I mean, 74

1 if you go to PA Power Switch, you'll probably see options

2 available in your community to go 100 percent renewable and

3 save money from your utilities. So technology is changing

4 a lot, and it's particularly changing in the renewable

5 space.

6 You know, I look out at the grid right now, and

7 there are some issues that need to be addressed, and they

8 are being addressed, quite frankly, at the wholesale level.

9 We are working through some changes at PJM and at the

10 Federal Energy Regulatory Commission. We really could use

11 a couple rulings from the Federal Energy Regulatory

12 Commission that may help get some of these pricing issues

13 correct. But by and large, I mean, the market is working

14 very, very well. I mean, prices are down, reliability is

15 up, diversity is strong.

16 In terms of what would be a good policy going

17 forward, I would say to you figure out, you know, what you

18 want and then figure out a market-neutral way to go about

19 it. Like I said, if the desire is to reduce carbon

20 emissions in the State, one, I think it's important to

21 recognize, as Todd said, that, you know, our carbon

22 reductions are on track to meet the Clean Power Plan

23 reductions, so we've done yeoman's work on the carbon

24 reduction footprint. Can we do more? Sure. You know,

25 let's have a conversation. Let's try to figure out how to 75

1 treat carbon in a market-neutral way that allows all

2 providers, you know, to participate in that low-carbon

3 future. There's probably technologies out there that have

4 yet to be discovered that could lead to the reduction in

5 carbon. And, like I said, you've got to examine the

6 existing AEPS, which supports a heck of a lot of carbon-

7 producing power.

8 So, you know, putting on my former PUC Chairman

9 hat, I would say a couple things. One, let the market

10 work. Let consumers choose. Don't dictate where they're

11 getting their power from. Let them decide it. And the way

12 things are headed, more and more people are going to choose

13 100 percent renewable because it's in their economic

14 interest to do so.

15 Two, let's have a conversation about carbon.

16 Three, let's talk about these communities that

17 are being impacted by closure. I think there's a real

18 valuable conversation to be had there, so that would be my

19 three-part plan right there, Mr. Chairman.

20 DEMOCRATIC CHAIRMAN MATZIE: Thank you, Mr.

21 Chairman.

22 MAJORITY CHAIRMAN ROAE: Representative Mehaffie.

23 REPRESENTATIVE MEHAFFIE: Thank you, Mr.

24 Chairman. Thank you for your testimony.

25 I'm assuming none of you are going to support my 76

1 bill. I'm kidding.

2 Todd, this question's for you.

3 REPRESENTATIVE NEILSON: Our bill.

4 REPRESENTATIVE MEHAFFIE: Pardon me?

5 REPRESENTATIVE NEILSON: Our bill.

6 REPRESENTATIVE MEHAFFIE: Our bill, sorry, sorry.

7 Thanks, Ed.

8 Before you were with API, you were, as you said,

9 spoke that you were a PUC Chairman in Ohio. It's a good

10 read, too, your testimony that you had in October 15th of

11 2013. You know, I think you hit it spot on. Your concern

12 was about baseload power and how it was going to affect

13 Ohio and what it was going to do for Ohio. And I think the

14 one thing you said is -- and you called it dash to gas was

15 your comment that you made. And you said stated for my

16 concern that the more dependent a system is on one specific

17 fuel type, the more the price risk and volatility there

18 exists for ratepayers. Do you still believe that?

19 MR. SNITCHLER: I think you've identified the

20 exact point, Representative. If you look at where we are

21 today versus where we are at that time, the grid is

22 actually more diverse now than it was then. This reported

23 dash to gas, which is we're going to be 100 percent natural

24 gas within the next two to five years, is a fallacy. The

25 strawman took a beating this morning with a lot of the 77

1 concern about all the nukes retiring and everything being

2 replaced by natural gas. Today in PJM it's 3 0 percent

3 coal, 30 percent gas, 30 percent nukes, and 10 percent

4 approximately in renewables. From my seat, that looks like

5 a very balanced portfolio. And I think the reality of

6 where we are today bears evaluation as opposed to where

7 someone suggests that we're on the cusp of retiring every

8 single generator that's not fired by natural gas.

9 I think you also have to look at where EIA says

10 we'll be, and the EIA data out to 2050 suggests that nukes

11 will continue to be 15 percent to 20 percent of the fleet,

12 coal will be 20 to 25 percent of the fleet, natural gas

13 will be somewhere in the 40-ish percent, and the balance

14 will be renewables, which continues to look like a fairly

15 balanced portfolio.

16 The other challenge that we have is that back in

17 -- I'll speak from my Ohio experience because I know it

18 better than Glen knows Pennsylvania. Back around 2 000 we

19 were 85 or more percent coal. There was no discussion at

20 the time about a need for balancing the portfolio, but the

21 situation on the ground, which is really revenue-driven,

22 has changed the position of some folks. And I have copies

23 of testimony from some of the sponsors of your bill or

24 supporters of your bill who would suggest that competition

25 drives innovation and suggests that that's how you get a 78

1 clean future, as well as competition is the ultimate good

2 outcome for consumers. And I think they were right then,

3 and I think they were right now.

4 So I think the concern about a dash to gas needs

5 to be tempered by what are the actual realities on the

6 ground. Does it need to be evaluated and looked at?

7 Without question. But are we at the point now where we are

8 overly reliant on any one fuel source? I would say

9 affirmative no.

10 REPRESENTATIVE MEHAFFIE: Not right now, but it

11 could happen if these plants close, which they're showing

12 you their trajectory is going down and down and they do

13 close them. What is going to replace them such as coal was

14 replaced by gas. So when you have one monopoly taking over

15 and controlling your market, like you said in your report,

16 I find it interesting that, you know, we got to make sure

17 that we don't let one fuel source monopolize that market.

18 And that is the truth. I mean, even in there you said like

19 if pipeline operators can't deliver, the generator can't

20 produce the electricity, and we have those problems

21 throughout, but we've also had the diversity that we have

22 now. And the main point of this bill is to make sure that

23 diversity stays in place and we make sure that our

24 consumers get the electricity that they deserve.

25 MR. SNITCHLER: And if I could respond, Mr. 79

1 Chairman, I think you raise -­

2 REPRESENTATIVE MEHAFFIE: I'm not the Chairman.

3 MR. SNITCHLER: No, I was referring to the

4 Chairman, but thank you, Representative.

5 REPRESENTATIVE MEHAFFIE: But thank you.

6 MR. SNITCHLER: I think it's important -­

7 REPRESENTATIVE MEHAFFIE: I like the way you're

8 thinking.

9 MR. SNITCHLER: I think it's important to respond

10 to some of your questions. I think you're correct on the

11 one hand, and I think there's a little more perspective

12 that needs to be added. When you look at how pipelines

13 deliver service, pipelines are not built in the same way

14 that electrical wires are built, and so they do not have

15 the same cascading outages that happen when the wires go

16 down. And frankly, that's one of the challenges that

17 virtually every fuel source has regardless of whether it's

18 got two years of nuclear rods or a 90-day coal pile or a

19 firm supply in a gas system. If the wires go down, which

20 is where more than 90 percent of outages come from, it

21 doesn't matter what your fuel source is.

22 So, in the end, I think we have to think more

23 carefully about how we're approaching some of the issues.

24 Pipeline infrastructure is today far ahead of where it was

25 5 or 10 years ago because there's been so much development. 80

1 You have seen better performance as a result of changes in

2 the market administered by PJM that has resulted in far

3 fewer outages because there's far more access to gas

4 supply.

5 So you're right in noting that we have to keep an

6 eye on the future, but I think it's important to see where

7 we've been and where we are today to show that the market

8 is evolving to keep up with what the situation on the

9 ground actually is.

10 REPRESENTATIVE MEHAFFIE: Thank you.

11 MAJORITY CHAIRMAN ROAE: All right. When the

12 last panel was up, Representative Bullock had wanted to ask

13 a question. We ran out of time. Do you have a question

14 you'd like to ask at this time?

15 REPRESENTATIVE BULLOCK: Yes. Thank you,

16 Chairman. When you run out on the last panel, then you try

17 to reconfigure your questioning, so I think I got a

18 question for this panel.

19 Good afternoon. In Philadelphia where I

20 represent many constituents, many who are struggling with

21 energy insecurity, housing insecurity, and rising health

22 costs, I often look for policy and legislation where I'm

23 trying to balance those very real costs for real people

24 with issues like our global economy and public health

25 concerns and environmental concerns. 81

1 My challenge with this bill is that it provides a

2 life-support to a zero-carbon emissions industry, one that

3 I definitely support on an environmental position, but does

4 very little else to lessen our State's carbon footprint.

5 It doesn't move the needle, it doesn't encourage wind,

6 solar, and other industries or increase those opportunities

7 for those industries. I was going to ask the last panel

8 would they be open to a broader conversation. I believe

9 you briefly mentioned that.

10 But I would like to ask AARP, is that a

11 conversation, a very nuanced conversation that you're

12 having with your members? You know, how are they thinking

13 about not just rates increasing but also possibly health

14 costs increasing or other concerns, you know, depending on

15 how we save this particular industry or encourage the

16 expansion of others like wind and solar?

17 MS. HUNG: Thank you for that question. I do

18 appreciate it. AARP members are always concerned about

19 their costs going up, and AARP has a very long history of

20 challenging rate increases all across the board regardless

21 of the actual industry. We're always concerned about what

22 the impact is going to be on our members, and we do have

23 some very serious concerns. I know calls and emails have

24 been going into various legislative offices right now

25 talking about those concerns, so you'll be hearing from 82

1 people, and you can hear directly from them about those

2 concerns because you are absolutely right. Anything that

3 they have to pay more for means they have to pay less for

4 something else.

5 REPRESENTATIVE BULLOCK: I guess are you having

6 those educational moments with them to discuss the nuances

7 here that, you know, an increased air pollution can result

8 in higher asthma rates, higher health costs, along with

9 those increasing rates and how do we balance those two

10 interests?

11 MS. HUNG: Yes, we do our best to educate our

12 members on the facts of whatever issue may be coming up,

13 and we do have those conversations. We do meet with our

14 members. We do have 1.8 million members in Pennsylvania,

15 so it's hard to reach everyone, but we do do our best and

16 we do try to provide information for them so they can make

17 decisions that will benefit them and their families.

18 MAJORITY CHAIRMAN ROAE: All right. Our next for

19 a brief question is Representative Mackenzie. Brief.

20 REPRESENTATIVE MACKENZIE: Thank you, Mr.

21 Chairman.

22 I appreciate the voluntary disclosure that some

23 of the members of our panel provided, and if there's

24 anything else that we should know beyond your current

25 places of employment, I would appreciate it, to hear from 83

1 the other panelists.

2 So my question, I'll start on the left, and I

3 understand I have a brief period of time, so we'll start

4 with Mr. Sunday from the Chamber. I asked the last

5 panelists about their support and the transition of $500

6 million from ratepayers to other interest groups. Those

7 who say that we need House Bill 11 say that if we don't do

8 anything, there will be a significant cost increase. So

9 you're opposed to the bill, so potentially if we don't do

10 anything there could be this cost increase. How would you

11 address that or respond to a claim like that?

12 MR. SUNDAY: Thank you, Representative. Much of

13 the advocacy again is pulling numbers out of the 2016

14 report, which we cosponsored. There's another report that

15 the same study group put out last year, and there's an

16 important clarification that those authors note in that

17 report, which is that, and I'll quote, "Recent PJM capacity

18 market performance with continuing new generation additions

19 in the face of persistent low-capacity prices may suggest

20 that capacity markets have changed in ways that can

21 mitigate the capacity price effect found in our prior

22 results." The report also noted that the total cost should

23 the two plants in question actually shut down, price

24 increases are about $500 million less than the 2016 report.

25 So, one, costs are lower than they originally estimated; 84

1 and two, PJM ended up behaving in a way that they did not

2 anticipate. What we do know is that this bill will

3 dramatically raise electricity costs for commercial and

4 industrial users.

5 REPRESENTATIVE MACKENZIE: Thank you.

6 MAJORITY CHAIRMAN ROAE: All right. We don't see

7 any Democrats on our list, so our next person is going to

8 be Representative Nelson for a brief question.

9 REPRESENTATIVE NELSON: Thank you, Mr. Chair,

10 yes, very brief question.

11 And I would appreciate the follow-up. Even

12 though I know we ran out of time last session, so we did

13 not get to hear FirstEnergy's plan in the event of closure

14 where they may be storing their nuclear waste, as Exelon

15 has disclosed.

16 My question for the panel is if we look at other

17 States nationally, and Illinois that had done a bailout

18 once, they now just past the second bailout out of

19 subcommittee, you know, so they're back going through that

20 process. In the earlier testimony you talked about our

21 goal as a State, and I think in a bipartisan effort our

22 goal is jobs and manufacturing opportunity, you know, to

23 keep our State flourishing. Could you touch on the

24 consequence of increased energy prices on manufacturing

25 such as steel and the potential plastics that we're 85

1 searching for?

2 MR. THOMAS: I mean, I'll give it a shot and then

3 I'm sure Kevin on behalf of the Chamber has some thoughts.

4 But, you know, one of the more, you know, frustrating

5 aspects of discussions, Pennsylvania is so well-positioned

6 right now, and it's for the very points you raised. Other

7 States have made some policy mistakes that are causing

8 their rates to go up. You know, I look at New Jersey, and

9 I've been in battles in New Jersey for a couple years

10 actually going back to 2011. I mean, their rates are now

11 about 30, 35 percent above Pennsylvania's largely because

12 of policy decisions they made.

13 Pennsylvania is well-poised in the region to

14 really be, you know, a home for low-priced electricity if

15 we continue on the path of competitive markets, we continue

16 to allow these markets to work as intended. So, I mean, I

17 absolutely agree with you. You know, electricity inputs

18 are a very important part of any business's decision, you

19 know, and having the ability to have low-cost rates

20 combined with the ability to choose because there are also

21 many, many companies that are voluntarily choosing to go

22 100 percent renewable or pay a little bit more in order to

23 get that service. And that's a great thing. We want to

24 encourage that.

25 You know, consumers should be driving this 86

1 marketplace. And guess what, if consumers demand, you

2 know, certain things, the industry has got to respond.

3 That's the way these things work. I mean, Todd's members

4 are already looking at many ways to eliminate carbon from,

5 you know, their processing. You know, there is great

6 progress happening if we allow the market to continue to

7 provide the innovation that the market can provide. And I

8 worry greatly that House Bill 11 represents a tremendous

9 step backward from that policy.

10 Go ahead, Kevin. I'm sorry.

11 MR. SUNDAY: Thanks, Glen. Thanks for the

12 question, Representative. And just to reiterate, yes, as

13 folks look to Pennsylvania, a difficult tax climate but our

14 energy resources and workforce are a reason they're looking

15 here. Electricity inputs, that's a big marker on the

16 evaluation criteria for new sites, and if we take a step

17 backwards, it's only going to disadvantage us further.

18 We're already in the mid-30s on job creation. I wouldn't

19 want to see us fall any further behind.

20 Further, existing facilities, this is a pretty

21 big sticker shock for them as they evaluate are we going to

22 invest in our facility or go somewhere in the South or

23 somewhere overseas? And there is an economic and

24 environmental consequence to that as well.

25 MAJORITY CHAIRMAN ROAE: All right. Next is 87

1 Representative Pickett.

2 REPRESENTATIVE PICKETT: Thank you, Mr. Chairman.

3 This is for Mr. Snitchler. I was recently told

4 that Royal Dutch Shell has pulled out American fuel and

5 petrochemical manufacturers, and they also announced that

6 they're at odds with API's climate policy. They stated

7 that they're hoping to change their climate policy. Could

8 you please discuss that and Shell's misalignment with your

9 policy at this point?

10 MR. SNITCHLER: Thank you for the question. I

11 read the same report that they have elected to terminate

12 their membership with AFPM. They have elected not to

13 terminate their membership with API and continue to have

14 ongoing discussions about addressing concerns about

15 climate. An API has said that we believe that climate is a

16 serious and important issue, and we think that innovation

17 can help us drive to solutions that will have meaningful

18 outcomes.

19 Member companies that participate at API are

20 engaged in, as Glen noted, actively trying to reduce

21 methane emissions, spending millions of dollars of their

22 own money to research carbon capture projects in order to

23 find ways to continue to reduce emissions from power

24 generation and other services that they provide as well.

25 So the industry is working very hard to try and address 88

1 some of those questions.

2 But the real issue I think here is that House

3 Bill 11 isn't so much a climate bill as it is an economic

4 bill, and so if this panel elects to have that kind of a

5 conversation, API would want to participate and engage in

6 that discussion with you. But that's not really the

7 subject matter of the bill.

8 I do think it's important to note because not

9 everyone is aware that a number of API members are heavily

10 invested in the renewable space not just in the United

11 States but globally and have taken the perspective that

12 they are now energy companies, not merely oil and gas

13 companies or oil and natural gas companies but have a

14 broader view of how they view energy and are trying to

15 engage in that space. And I think that's part and parcel

16 of the same discussion that you mentioned.

17 REPRESENTATIVE PICKETT: Thank you.

18 MAJORITY CHAIRMAN ROAE: Chairman Matzie.

19 DEMOCRATIC CHAIRMAN MATZIE: Thank you, Mr.

20 Chairman. And again, thank you. A follow-up question

21 really probably for Todd. The efforts of the gas industry

22 relative to natural gas if in fact nukes would go away -­

23 let's hypothetically say they all went away and gas was

24 looked at, like some folks have mentioned, would pick up

25 the slack so to speak. How would that affect -- and again, 89

1 we believe -- and I was a strong supporter in a bipartisan

2 manner to get the petrochemical tax credit passed to bring

3 Royal Dutch Shell to Beaver County where, quite frankly,

4 it's always sunny in Beaver County for everybody. What

5 would that do from a manufacturing -- is there enough? I

6 mean, because that was one of the goals when we passed the

7 petrochemical tax credit, when we worked with the Chamber,

8 when we worked with labor, when we worked with all the

9 stakeholders was we want to get as much gas out of the

10 ground as possible so we can have a renaissance.

11 MR. SNITCHLER: Mr. Chairman, is your question do

12 we have enough gas -­

13 DEMOCRATIC CHAIRMAN MATZIE: Right. Yes, yes.

14 MR. SNITCHLER: -- to do all those things? The

15 short answer -­

16 DEMOCRATIC CHAIRMAN MATZIE: And still supply -­

17 MR. SNITCHLER: The short answer is yes. As I

18 noted in my testimony and more so in my written testimony,

19 the volume of natural gas and oil that's being produced

20 today is at record highs. The amount of natural gas and

21 oil that can now be moved bidirectionally -- it's not all

22 coming from the Gulf but moves from the various shale

23 formations around the country and can be delivered into

24 various markets -- makes much easier the ability to move

25 commodities to the markets where they're most desired. And 90

1 you're seeing that with pipeline infrastructure buildout

2 near and around the Shell facility that's under

3 construction in Western Pennsylvania, which is vying for

4 the same kind of projects that Ohio and West Virginia would

5 love to see as well.

6 And so the short answer is yes, there is

7 sufficient supply, and I can point you to the fact that we

8 have seen record exports via LNG over the last year, and

9 you have seen prices actually decrease in natural gas

10 around the country on average because you're seeing

11 commodities that have a point where they can export to

12 market and get a higher price are willing to then produce

13 and move that commodity where they can get that price. So

14 if the price is right, to borrow a phrase, you're going to

15 see the commodity move to where it needs to be.

16 DEMOCRATIC CHAIRMAN MATZIE: Okay. Thank you.

17 Thanks, Chairman.

18 MAJORITY CHAIRMAN ROAE: All right. Next is

19 Representative Delozier.

20 REPRESENTATIVE DELOZIER: Well, thank you, Mr.

21 Chairman. I would like just to get some feedback. This is

22 a question that I've received from constituents in emails.

23 So we have the situation where the APS went in, subsidized

24 alternative energy. We needed a strong market, support

25 alternative energy, so we have a government subsidy for 91

1 that. These same individuals that are supportive of

2 supporting alternative energy are now saying no more

3 subsidies. So the rub there is that they support subsidies

4 for certain types of our grid but not other types of our

5 grid.

6 So my question really -- and I just want feedback

7 on responding to that kind of argument as to the fact that

8 they do not want to assist in this venue, but they don't

9 want to get rid of AEPS because they feel that the

10 government should subsidize alternative energy. So what is

11 the argument necessarily on the fact that we're picking and

12 choosing which ones government subsidizes? We were talking

13 competitive markets. If we're truly talking competitive

14 market, shouldn't everyone be on the same playing field and

15 there be no subsidies and they compete as they will be who

16 can survive?

17 We're talking alternative energy obviously

18 becoming stronger, which is good, we need that. We want to

19 support the alternative. But if we truly are talking about

20 a competitive playing field, white they not all even and

21 either not subsidized or subsidized? Thank you.

22 MR. THOMAS: Yes, I'll take a stab at that. And

23 maybe I should add to my list for Representative Matzie a

24 fourth thing and that is for this Committee to have a good

25 conversation about the existing AEPS program in the State. 92

1 I think if, you know, you pull that the layers of the

2 current AEPS program, I think there would be a lot of

3 surprise about where that money is actually going. I mean,

4 there's a money going to a lot of waste coal piles in West

5 Virginia. There's black liquor facilities in Maryland.

6 There's, you know, solar facilities in North Carolina. And

7 I know there's been some legislative action to address

8 that.

9 But the vast majority of those dollars are not

10 flowing where I think this Committee thinks those dollars

11 are flowing for. And I really think before you even

12 consider expanding it -- and let's talk about -- I mean,

13 we're talking about going from, you know, 18 percent to 68

14 percent of the AEPS, you know, dictating where resources

15 came from in the State, so I think a careful examination of

16 what the current AEPS looks like is in order.

17 I think, you know, it was passed along time ago,

18 it hasn't been revisited that much. I'm not sure it

19 continues to reflect the priorities in this room, you know,

20 and I think we need to be open to the conversation of

21 possibly getting rid of it and letting consumers just

22 choose on their own. It's remarkable to see how many

23 people -- I mean, cities, towns, the city of Pittsburgh,

24 the city of Philadelphia, you know, Schuylkill Township in

25 Chester County, Marion Township in Montgomery County, you 93

1 know, all these communities are making the choices to go

2 100 percent renewable because the market allows them to do

3 it. And guess what, it's starting to become more

4 affordable to do it.

5 So, yes, I think it's a terrific question, you

6 know, and what I would say to your constituents is, yes, I

7 think it's time we relook at existing AEPS and make sure

8 it's still making sense.

9 MAJORITY CHAIRMAN ROAE: All right. I don't see

10 any other questions, and we're pretty much right on time

11 here. Members have to be on the Floor at one o'clock.

12 But I would like to thank both panels for your

13 testimony today, and I'd like to thank the audience. You

14 were a good audience. Everybody listened well. Nobody

15 interrupted or anything, so I appreciate that. And thank

16 you to House security and the House staff, the Executive

17 Directors, and so on.

18 I encourage all the Members to please read the

19 complete packets. And I do want to make a correction.

20 Earlier I said the State House website would have this

21 information. Well, somebody sent me a message that that

22 might not be the case. But if you go to my website,

23 www.RepRoae.com -- Roae is spelled R-o-a-e -- that's where

24 it's going to be. I'm going to see if I can get it added

25 to the PA House GOP website, but www.RepRoae.com is a 94

1 website where the testimony is going to be.

2 And thank you again, everyone, for participating

3 today. And I'll see all the other Members up on the Floor.

4 Thank you.

5 Representative Matzie, the Democratic Chair, do

6 you have any -­

7 DEMOCRATIC CHAIRMAN MATZIE: I'm good.

8 MAJORITY CHAIRMAN ROAE: He said he's good.

9 Thank you.

10

11 (The hearing concluded at 12:56 p.m.) 95

1

2

3

4

5

6

7

8

9