Remarks Prepared for Energy Secretary Bodman Edison Electric Institute

Thank you. It is a great pleasure to appear before such a distinguished audience.
President Bush has always said the private sector is the key to securing a strong and stable energy sector. I want to take this opportunity to affirm our commitment to working with you, the power generation, transmission and distribution industry, to meet the nation's need for affordable and reliable electricity.
Our Administration's approach to enhanced energy security covers three broad areas: increasing the supply of energy from clean, alternative power sources... improving energy efficiency so we can do more with less... and upgrading and modernizing our energy infrastructure.
Let me begin with the logical first step: creating the energy sources we need to maintain a healthy, growing economy. The President's Advanced Energy Initiative calls for additional spending-beginning with a 22% increase next year -to speed the development of alternative and renewable energy sources. We are focusing on wind and solar power, cellulosic ethanol, lithium ion batteries for use in hybrid-powered vehicles, and hydrogen fuel cells.
On this subject, I want to take this opportunity to announce that I the members of the Hydrogen and Fuel Cell Technical Advisory Committee have been selected, and they will soon convene for their first meeting . In accordance with the Energy Policy Act, this committee will give me expert, candid advice on the Department's activities, and will help direct research and programmatic funding. The committee includes representatives of domestic industry, academia, government agencies, and environmental groups, as well as experts in the area of hydrogen safety. I look forward to their first report.
In addition to hydrogen and the other renewable energy sources I mentioned, we are also investing heavily in clean coal technologies, such as Integrated Gasification and Combined Cycle. And we are spending $54 million next year on the FutureGen initiative to build a demonstration plant incorporating the most advanced clean coal burning and carbon sequestration technologies. Last month, I was encouraged by the display of public enthusiasm for this power project, when seven states suggested 12 possible sites as the locale for this prototype plant.
Along with alternative and renewable fuels, we believe emissions-free nuclear power must be part of the solution to this nation's energy challenges. We are making our case to Congress for an initial $250 million in funding for the Global Nuclear Energy Partnership. This is an international effort to develop new recycling technologies for spent nuclear fuel that will minimize proliferation risks and future permanent waste storage concerns, while also helping to supply urgently needed sources of affordable electricity in the developing world.
We are also moving forward briskly with our Standby Support program of federal risk insurance for the first companies that commit to ending our 30-year hiatus in building new nuclear power plants in the U.S.
The program, which was authorized by the Energy Policy Act, will provide up to $2 billion in insurance against the costs of delays for the builders of the first six new plants that are added to our generating fleet. We issued an interim rule for this program last month and will follow that with a final rule in August.
At the same time, we are also moving ahead with another requirement of the Energy Policy Act-the loan guaranty program for new clean energy projects including new clean coal and nuclear power plants. We are creating a Loan Guaranty Office within the Department with initial funding of $2.7 million... This program will be monitored by DOE's Chief Financial Officer so that the proper financial discipline will be brought to bear on our project evaluations.
All these investments in clean energy will keep our economy growing, and will help protect our environment. On this point, let me take this opportunity to thank all the power sector CEOs who are here for their participation in the President's Climate VISION program to reduce greenhouse gas emissions... as well as those of you who are involved in the Asia-Pacific Partnership on Clean Development and Climate. I think American Electric Power CEO Michael Morris may be here today; he was with me at the APP ministerial in Australia, where we made good progress, in my view, to finding ways to work with industry leaders to address the climate change implications of our energy use.
One of the best ways for helping the environment, of course, is by improving our energy efficiency.
In the wake of Hurricane Katrina last year, our Department answered the President's call to conserve energy by sending out teams of experts to advise federal facilities that are big users of natural gas and electricity on how they can operate more efficiently.
Our teams have now visited 34 federal sites and identified potential annual savings of 970 billion BTUs of natural gas and 184 billion BTUs of electricity. That equals 10% of the energy used at these sites and could save taxpayers $10 million in annual utility costs. We are also making broader use of the Energy Savings Performance Contracts that were reauthorized by last year's Energy Policy Act. These allow federal agencies to reap the benefits of lower utility costs through capital improvements paid for by contractors, rather than from public funds. I believe they represent a win-win proposition for taxpayers.
Through our Energy Savings Assessments program, we are also working with 200 of the most energy-intensive manufacturing plants in the U.S. to help them cut their energy costs and natural gas consumption.
The 61 audits completed so far identified ways to reduce natural gas use by over 20 trillion BTUs a year-that's enough to heat 300,000 homes-and deliver the plant operators nearly $200 million in annual savings.
Even with these successes, however, improving energy efficiency is not something government can achieve on its own. That is why I am looking forward to working with our counterparts at the EPA-and with your incoming chairman, Jim Rogers of Duke Energy-to develop a public-private partnership approach that will encourage electric and gas utilities to deliver greater energy efficiency.
Now, power generation and energy efficiency are both critical, of course. But neither will do us much good if we can't reliably get energy to the consumers who need it.
So one of our most important goals is to make certain our electrical infrastructure is strong enough to reliably and efficiently accommodate the nation's growing demand for power. It is true that immediate causes of the blackout that hit the Northeast, the Midwest and Canada so hard three years ago were operator errors. But it is also true that our transmission and distribution system hasn't kept pace with two other factors putting an increasing strain on the grid: producers' capacity to generate power and customers' desire to consume it.
To reduce the risk of future disruptions, and to reduce consumers' electricity bills, the entire system must be upgraded and woven together. This effort of modernizing and expanding the infrastructure will require focused and sustained collaboration among planners, regulators, other government officials, and industry.
Several provisions of the Energy Policy Act are aimed at achieving this critical goal. One of the most important is the authority the Act grants to FERC to approve mandatory reliability standards for the nation's power grid.
I know that the North American Electric Reliability Council has applied for designation as the new Electric Reliability Organization, and kicked off the debate on what standards should apply with a set of 100 specific proposals. Joe Kelliher is working hard to come to a decision on NERC's application and I am optimistic that we will have new mandatory reliability standards in place early next year.
Another key provision of EPAct involves the designation of energy corridors on federal lands in the Western States, which our Department-in conjunction with the Interior, Agriculture, and Defense Departments-will announce in 2007. Two weeks ago, the Bureau of Land Management released a map showing the proposed energy corridors being considered. We would like to get your input on these proposed corridors, to help us make informed and balanced decisions next year. So I invite you access this map on the Internet at: www.corridoreis.anl.gov.
Now, while these corridors are intended to be available to serve future needs, we are also looking at more immediate concerns-such as identifying the most important congestion points in the electricity grid. Our Department is currently preparing a study, to be released in August, which will list areas where DOE believes transmission expansion is needed now, or within a few years. This study is based on suggestions many of your companies have provided to us ... and I want to thank you for that cooperation. In this study, DOE will also identify a "short list" of areas where we believe transmission expansion is especially urgent. After the Congestion Study is published, we expect to enter a period of intensive dialogue with stakeholders about the possible designation of "national interest electric transmission corridors" in relation to the areas on the short list.
As I said a moment ago, resolving our infrastructure, siting, and congestion challenges will require the active cooperation of many parties. Governors and their energy policy advisors, state regulatory agencies, state legislators, and city and county officials will all have important roles to play. In addition, you are probably aware of the "backstop" authority granted to the Federal Energy Regulatory Commission to site interstate electric transmission lines in special circumstances. I want to mention that the purpose of that provision is to help the federal government work with states and localities to resolve siting issues. My hope is that through federal action in the most critical cases we will stimulate the development of effective, home-grown regional solutions to most of these regional problems.
The energy challenges we face in the United States are significant; but they are hardly insurmountable. In fact, though we have much work ahead of us, it is also useful to remind ourselves just how strong our energy sector is, and how many advantages we enjoy here in the United States.
You may have heard that President Bush has asked me to go to Iraq soon. On my trip I will be meeting with my two counterparts: the Minister of Oil and the Minister of Electricity. They are both new to their jobs-members of the new cabinet just formed-and I hope to offer some encouragement and advice.
I know the Iraqis are working to create the laws and policies that will encourage foreign investment, and allow them build up their energy resources which are such a great national asset for the people of Iraq. They are also working hard to get reliable electricity... by building generation capacity closer to metropolitan areas, so that they can curtail the sabotage against transmission facilities, and provide a steady supply of power to the cities. In fact, one of our specific goals is helping Iraq to establish "rapid-repair teams" to fix the damage caused by attacks on their energy infrastructure.
Progress in Iraq will take a great deal of determination and hard work. But from the ashes of Saddam Hussein's tyranny, the Iraqis are succeeding day by day in building a stable, prosperous, and democratic nation in the heart of the Middle East.
So let us take heart from their resolve and their dedication. And let us count our blessings, even as we recognize that we also have work to do in building a stronger, more stable, and more reliable energy sector here in the United States.
On that note, let me close by wishing you success for the remainder of your conference. And thank you again for your kind invitation to speak to you today.
Source: U.S. Department of Energy
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