think a lot of it also is state permitting and state eiss, et cetera. i do want to note that the -- you mentioned the amount of coal in china of course uses roughly half of the world's coal use. and we expect that they will be peaking their coal use relatively soon. but still, a lot of coal being used. we, of course, believe that carbon capture and sequestration and often with eor is critical. i do want to note that the department of energy will be hosting the international carbon sequestration leadership forum in montana. i think in august i believe it is. and we'll be sure to get you that information for that meeting. >> well thank you.

and i know your review mentions the administration's federal infrastructure project permitting dashboard and the review recommends expanding an online project tracking system. i guess as we look at the broader energy picture and given that coal is still the number one source of electricity in america, it's number one and 51% is certainly in montana, i would like to ask you to consider perhaps adding tracking coal export projects as we look at the broader national energy infrastructure as a part of that equation. i think it's going to -- i think we all agree we want to continue to work to improve the outcomes here in terms of coal and coal-fired electricity. but the reality is it's our number one source of electricity and needs to be an important part of the portfolio. >> we can look at that. i think coal exports are roughly 100 million tons, i believe. it's quite a large number. >> yeah and we look at south korea, taiwan japan, they're

relying on other countries like indonesia and australia. and back to this point, 88% of coal productionen its outside the united states. we have a chance to continue to grow jobs, tax revenue by expanding our coal exports, and i think it's a way to keep electricity prices lower as well as create jobs and tax revenues for our infrastructure. >> i actually have just now was handed some of the words that we have on that. actually the east coast ports are alone are shipping about 70 million tons. and the companies -- it says here, quote, companies that own and manage export terminals continue with long-range plans for expansion focused on the potential for continued demand in europe, asia and south america america. so these are data that we'll look at. >> i'm glad to see the east coast, just turn your attention to the west. senator barrasso here from wyoming, we have tremendous opportunities right now between wyoming and montana here,

looking at west coast opportunities. and getting back to where is the expansion occurring? over in asia. west coast terminals become very, very important. >> understood. and i recognize the low sulfur content. >> thank you. >> yeah. >> thank you, madam chair. secretary, one of the areas i'm pretty excited about right now just because we're seeing such rapid change is the area of power storage where capability is increasing at a pretty good clip. costs are coming down quite quickly as well. and i'm wondering if you could take a few minutes to talk a little bit about what you see as d.o.e.'s role in accelerating this technology sector that could really change the way we think about energy, change our generation needs, really facilitate time shifting and move us forward to a very, very different kind of grid than sort of what we've experienced in the past.

>> thank you, senator. yeah storage certainly could be a game changer. as you sea, costs are coming down across the board. utility scale storage, distributed storage, which is actually very interesting. >> sure. >> and then of course, transportation storage systems, batteries, which of course might also be grid connected in the future. so we are working on all of those. arpa e, for example has had strong support in this area. we have a hub that we have established at argan national laboratory, across the board with novel chemistries, et cetera, to reduce costs. and we are including storage in a lot of our system modeling activities to see exactly how storage can help us achieve our goals in ways that might otherwise be much more complicated. if i may put in a plug, i think

the -- we did do a report at senator wyden's request about a year and a half ago, i think on large-scale storage and integration into the grid. and that's very important. i'd like to add, however, that the issue of consumer-level storage combined with distributed generation is getting to look extremely interesting and can be yet another challenge to the utility business model that we have to -- that we have to look at. >> i think that's quite clear. i'm sort of encouraging utilities to get ahead of this and make some decisions about incorporating these things into their business model because if they just look at saying no or making it more team to put distributed generation on their homes, distributed solar -- distributed storage at their homes, you know you could see a

very unstable or business model moving forward. >> yes. >> it kind of brings up the issue of rate making. and i want to ask you a related question because both the cost the photovoltaic panels coming down very quickly plus the energy storage changes that we're seeing in the distributed market are fueling a lot of change. and i think one of the things we need to see is the ability of states to make very accurate decisions about the costs and benefits, both sides of the ledger of those things being brought onto the grid. and i wanted to ask you if you think that state regulators have the tools that they need to adequately quantify both sides of the ledger, both the benefits and the costs of distributed generation and distributed storage so that they can make accurate rate cases. and is this an area where possibly the labs might be able to help states accurately assess those costs and benefits?

>> i think there's a long way to go. and in fact, one of the major recommendations -- major, again one of the many recommendations, i should say, i guess in the qer was that we really need to work on getting better valuation algorithms for all kinds of services that are being provided in the grid including, of course, in the distribution system, which you were referring to in effect. the -- and so you alluded to the issue of distributed solar for example, and we know what's going on with the arguments involving net metering and value to utilities. and i think you know, on the one hand there is a real issue of how do you value the connectivity that is still there? but on the other hand, how do you value the benefits to the overall grid system from either distributed generation or

efficiency programs? in fact another issue as you know, another court issue is this question of how do demand side programs propagate back to rto and iso considerations and regulation. so this is a critical problem, and we certainly identified it. we didn't exactly put the solutions forward, but i think that's something to work on. and i think your idea maybe of getting a lab focused on this would be good, particularly in that we have also proposed one of the major, quotes, down payments that we have in our fy '16 budget proposal to congress is the grid modernization. now, the grid modernization program we put forward is not simply about you know, syncro phasers on the high-voltage lines. it includes grant programs and includes a whole set of issues. so we could take that on. >> i look forward to working

with you on that and i think now is the time because we're seeing a lot of policy decisions made with a very meager amount of data. and the more data we have the more direction we have the better those policy decisions will be. >> if you have some specific ideas and directions we'd love to get together and talk about them. >> fantastic. thank you. >> critical issue. >> yeah, secretary, nice to see you. i was pleased to see an emphasis upon lng export terminals. as you know, two parishes in louisiana, kind of ground zero for that sort of thing. >> mm-hmm. >> and the original qer i'm told had increased funding to dredge the ship channel which will be so important if two tankers are going to go side by side, that sort of thing. but then i'm told that omb kind of pulled funding out. now, of course i'm representing the state with lots of harbors. i'm looking at the harbor maintenance trust fund which has

more than enough money to pay for all this, and it's not happening. so any thoughts as to why when the money's sitting there, we're not emphasizing using the dollars that are raised in order to increase the potential of the infrastructure that you stressed so wisely in your qer? >> well you apparently have seen the cartoon that we had in terms of the calcasieu channel and certainly the issue of keeping up with our inland waterways, problems in this case the dredging issues in that channel are obviously very important. all i can say is that i think the administration is committed to trying to accelerate those.

and two, can we have some transparency as to their assumptions because it's such a complicated project?

in terms of some nuclear projects, they do a lot of complex projects. >> i can see nuclear projects for a defense vehicle for example, a defense project but that would be quite different from this. >> first of all, of course, it's a unique project. so no one has looked specifically at this project other than d.o.e. and the contractors. i want to say when i looked into this job i made it very clear that i wanted to be transparent but also straightforward and data driven. and sometimes the results aren't so pretty but when we looked internally at d.u.e. this last year, we came out with a full

life cycle cost north of $30 billion. that in fact led to the idea of them going out for an independent contractor to look at that. the increase -- >> $30 billion in addition to that which was spent or $30 billion which was spent. >> it was north of 30 -- in that case, it was including the 4 to 5 that had already been spent. you know, that scale. two points about the aerospace, one is that they put in a lot of risk management contingency number one. number two is that the charge was included a cap on the appropriations spending annual appropriations spending that we viewed as being reasonable. now, the trouble was then that cap -- and this has been our problem right from the beginning, that cap then spreads the project out so long that it

builds up. informally, we have looked at the implications of allowing a higher appropriations -- annual appropriations cap and that does lower the life cycle cost significantly, but it's still in the high $30 billion, the high $30 billion. and i want to emphasize, that's not just the mock's plant. partly we're talking apples and oranges. the plant itself is only one part of a much bigger project including how you get the pits down into plutonium oxide and, of course, the operating costs over decades. so i want to clarify that's what -- let's call it the high 30s or $40 billion. >> i'm over time but i look forward to that briefing, thank you. >> okay. >> if i get a second shot, i'll take a shot on something else. >> okay. >> thank you madam chair.

first, mr. secretary, i want to thank you for your role in the iran negotiations. there's an extraordinary article, i think it was in "the new york times" recently about the role the department of energy played in analyzing the various proposealproposals. >> the labs. >> and it strikes me as fortuitous and the extreme that at the moment we are under these particular negotiations, we have a nuclear physicist in charge of the department of energy. i want to go to an appalling chart on page 226 of the report. i'm sure you know what i'm talking about. it's the differential in gas -- natural gas prices between new england and the rest of the country. 2-7 is the number of the chart. this is an infrastructure problem. and i just think it's something -- it's absolutely urgent for our region.

we went into natural gas in a big way, as you know starting in about the year 2000. now 50 to 60% of our electricity comes from natural gas. a lot of people like myself switched to natural gas to heat our homes. and last winter, winter before last, we had the highest natural gas prices in the world. and this shows us that almost double the u.s. rate. so i just hope that the department can be aggressive and forward-leaning in helping the governors, the delegation, the utilities to solve this problem. it's a pipeline problem. it's not a gas problem as you know. i think it's going to take an all of the above kind of strategy in terms of permitting and ts ait's a really urgent problem for the region. i assume awe gree. >> yes. in fact, the very first field hearings that we had for the qer were in new england specifically driven by the gas pipeline

issue. the representatives of all six governors were part of that meeting. and frankly the remarks that they made were such that the governors felt that they kind of were going to have this under control and would take care of it. in fact, i understand that next year, in 2016, there will be a substantial expansion of capacity taking gas from the marcellus, at least into kind of the boston area through there. but getting up farther north is a challenge there. i don't know how this will turn out, and i'm happy to work with you, senator king. >> well this is the problem with our system. we're either federal or state. we don't have regional entities and i think this is a case where we're not asking for federal

intervention, but we're asking for a federal quarterback, in a sense. >> yes. >> i think you can help to convene and move this process forward. >> and we are happy to do that. again, i think the issues for the southern part of new england look like they're coming under control probably next year. i don't know, but a good discussion. there are discussions about getting marcellus gas up to canada. >> right. >> and that might provide an opportunity for moving gas to northern new england. >> that brings me to my next question. there is a discussion about reversing the maritime pipeline which runs from eastern maine from massachusetts to nova scotia, reversing it and then exporting the natural gas from canada which would mean it would be technically not under the national interest review. i would hope that you would consider, as that project moves forward or the discussions, inserting a requirement that that gas be divertible during times of peak demand rather than going to canada, that there be a

provision that during peak demand, it could be retained in the region. we can discuss this further, but i hope you'll think about it. >> there certainly will be a national interest determination. >> good. and i commend that issue to you. quickly, i want to associate myself with the comments of senator hinrich about distributed energy and storage. i recently rewatched "the graduate." and the guy in that movie says "plastic," famously, "plastics." i would say if it were today, he'd say storage, energy storage. that's going to be a huge issue. i think one of the things you can do, and i think one of the troublesome issues and this is a national security issue s it seems to me, and it's also sort of a private rights, personal rights interest to have energy generated at your house. but the challenge is what's the

right number for the grid charge for backup and capacity? and it's got to be sufficient so that other rate payors aren't bearing the cost but it also can't be so high as to unreasonably burden this nacent development which is very important which i think is going to happen anyway. i think another area where you could be very helpful to us is to have your smart people thinking about what would be the formula for determining a reasonable backup charge or a reasonable capacity, however you characterize it. and finally, to really help us start thinking about i think, we've got to get to the point of realtime time and date metering and there's great value to the grid if solar is on at 4:00 in the afternoon. there's not so much value if it's 10:00 in the morning, how to figure out those kinds of

issues so that the compensation to the homeowner is fair and reasonable and also provides the proper incentives for that power being generated when we most need it. >> again that's the whole issue of the valuation which we need to look at desperately. and it's going to become more and more critical including for what i would call especially maybe semirural areas that have a grid and distribution system, and yet if as people go, perhaps off the grid because storage becomes useful obviously that then, spreads the cost over a smaller population. and it can be a real issue. so i think we have a real challenge as we look through what is an opportunity of the new technology possibilities and yet the transition from our current model is going to have some real strains in the system. >> thank you. >> yeah. >> thank you. mr. secretary, thank you for

your work on the iran negotiations. thank you, madam chair. >> thank you, senator king. secretary, i understand in response to questions from both senator gardner and senator barrasso where they probed a little bit on the issue of oil export. you said for purposes of this qer, you didn't go into that. and i understand -- i understand why. we're talking about infrastructure. but i also understand that this is one of those connects or nexus where if you -- if you have policy decisions that are made with infrastructure today as it is in place you're probably not going to be prepared for tomorrow and recognizing when we're talking about the issue of oil exports and what that might do for increased production domestically, bringing on new sources of supply which will then require additional infrastructure, that there is a

connection there. i understand why you would defer on a question like this but i do think that as we are talking about an energy infrastructure and policies for the country going forward, we need to be looking at the united states it

is our partners to the south and north, and it's that north american security and integration. and you spoke a little bit more

a little bit in previous responses about what we're doing to collect and share data. i think that that's critically important. but our reality is is we're still looking at these permitting delays for cross-border pipelines. obviously keystone xl is something that is out there in the news but it's not just keystone xl. it is so much more that we have going between our borders to the north and to the south. can you elaborate just a little bit more on how we really achieve what i think you and i would agree is critical not only to the united states but to our partners, mexico and canada as well? how do we get there? because right now we can't even get moving with a simple swap between canada -- excuse me, between the united states and

mexico for our heavy -- for their -- for our light for their heavy. >> right. well, i think, first of all, this may sound like a very, you know vanilla answer, but i think one of the issues is we need to start a much stronger dialogue with both countries than we have had. in fact, i was kind of shocked, frankly, when i -- >> when you say start, we've all assumed that we've been having these dialogues. >> okay maybe start was not quite the right word but i was trying to give you the impression that it's been nowhere near as robust as it should be. >> i would agree. >> frankly i was shocked, as i was about to say when i went to ottawa last year, it was apparently the first time the secretary of energy had been to canada in well over a decade. which was kind of surprising. we have now agreed among the three energy ministers of the three countries that we will have at least a -- at least an annual trilateral energy

meeting. for example, the data agreement we signed last december, we also met together actually in houston this past week and had a panel together. so part of it is we do have to have that discussion identifying issues. i can assure you that issues like with mexico the swap were raised, and i will be part of that discussion in the add many administration to at least discuss that decision. i think it's a very important decision. we have just set up a joint task force that i will chair on the -- i do chair on the american side with mexico. and in fact, we'll be in mexico in may meeting with both the energy and the environment ministers. so i think we are -- and the qer's been part of that frankly, has really been picking up the pace of this dialogue. so i think we're mapping out a whole bunch of questions now

that we need to address. and i want to make some progress in the next year and a half on this. i might add, by the way, the mexican delegation, a subject that we've talked about before in a different context, but they, for example, also raised a desire to work closely together on something we have not worked on together which is methane hydrates, another issue. so i think we're getting an agenda mapped out, and now the issue is to really go forward. >> well, i would certainly encourage the administration to be aggressive with this. we talk about it and to hear you say that we haven't had a secretary of energy visit canada in a decade is really stunning, yeah. >> it was crazy. >> we can do better than this. thank you. senator cantwell. >> thank you madam chair. mr. secretary, i had to step out for a moment, but i know that several members have been talking about the grid in general. i mean, of this quadrennial