Department of Energy JAY E. HAKES Jay B. Hakes was nominated by President Clinton to be the Administrator of the Energy Information Administration (EIA), U.S. Department of Energy (DOE), on July 22, 1993. He was confirmed by the United States Senate on September 23, 1993. EIA is the branch of the Department of Energy responsible for collecting and analyzing energy data for the Federal Government. It is recognized as the authoritative source of U.S. energy information by government policymakers, industry, and the public. The Agency has adopted a strategic planning process emphasizing the goal of accuracy, timeliness, accessibility, efficiency, and customer satisfaction. BIA was one of the original case studies on performance measures analyzed by the American Society for Public Administration. Energy is the fourth Federal agency in which Dr. Hakes has served. From 1977-80, he held positions at the Agency for International Development, Department of the Interior, and the Executive Office of the President. From 1980 to 1993, Dr. Hakes worked in various capacities for Florida Governor and later U.S. Senator Bob Graham, including positions as State Energy Director and Governor's Chief of Staff. A 1966 graduate of Wheaton College, with a masters degree from Duke University in 1968, and a doctor of philosophy degree from Duke University in 1970, Dr. Hakes taught political science at the University of New Orleans from 1970 to 1977. In the past year, he has published two articles in Public Administration Times on performance measures-- "Comparing Outputs to Outcomes" (October, 1996) and "Performance Measures and Organizational Change" (July, 1997) Dr. Hakes was born in Gallipolis, Ohio. He is married to Anita Zervigon. EIA RESPONSE TO DOE AND EPA CRITICISMS Chairman CALVERT. Thank you. Doctor, do you have any other comments on some of the criticisms that you have on your study here today by the other witnesses? Dr. HAKES. Well, one of the criticisms that was made is that the EIA is made up of a bunch of pessimists. [Chart.] [The information follows:] Dr. HAKES. And as I think the line shows in our study between the frozen technology case and the baseline case, we have a lot of technology advances in our baseline study. And we have actually, in our projections, been very optimistic about technologies that aren't even being commercially sold yet. I mean we have sort of predicted that the combined cycle natural gas plant would sort of take over electric generation, even when they weren't being sold extensively commercially. We have seen opportunities for refrigerators where the technology wasn't even commercially available yet. So we have adopted a lot of advanced technology. But if we had time, I could give you lists of press releases about great, new technologies that are about to hit the market, and then find one sentence 2 years later about how the company had dropped that program. So I think what our analysts do is they look for those technologies that can play a very positive role. They ask a lot of tough questions. They don't accept all of the optimism that comes from particular industries or from program advocates, and I think they arrive at reasonable estimates. And I think our, certainly, baseline estimates are quite aggressive in adopting new technology. So I feel that that is an important point. I think where we get into issues of cost and that kind of issue, we need to sit down and compare notes. We feel that all of our work on costs can be fully documented. We feel that our costs on combined heat and power, despite what has been said in some of the other testimony, can be well documented. And we feel that there is sometimes a tendency to underestimate costs when programs are being advocated. So, that would be, in general, a response to some of the criticisms of our report. Mr. GARDINER. Mr. Chairman, if I could just say I think our criticism of this report is quite simple. Chairman CALVERT. Well, Mr. Gardiner, I will get back to you in a minute. Mr. GARDINER. Well, I just want to be clear that Chairman CALVERT. I haven't recognized you. Mr. GARDINER [continuing]. We are saying, basically, that the analysis Chairman CALVERT. Mr. Gardiner. Mr. GARDINER [continuing]. Is incomplete. Chairman CALVERT. [Chairman Calvert uses gavel.] I will recognize you at your proper time. I am asking Dr. Hakes some questions. CREDENCE OF DOE AND EPA CLAIMS OF CARBON SAVINGS Doctor, DOE claims that its programs will save 112 million metric tons of carbon equivalent in 2010, and EPA claims its programs will save 354 million metric tons. What credence would you give these claims? And, lastly, what trust would you have in an analysis of any firm that receives many millions of dollars annually through the Department of-DOE? Dr. HAKES. Well, I think that these programs definitely produce positive results. I think where we get into some disagreement is that some of those results are already in our baseline, and some of them are things that actually are new and save emissions, and some of them actually are quite low-cost programs. So, the fact that there is a potential-that they are in the baseline, may not be a terribly big issue. But, you know, if someone does something voluntarily, a lot of times when you go back and talk with that firm, they will report in interviews to us or GAO or other people, that these are actions that they were planning to take anyway without the voluntary programs. But I don't want to suggest-I think Mr. Gardiner and I would agree, that there aren't plenty of programs where the voluntary program actually does come up with a fairly new idea that the industry may not have thought of. So, our general approach, as I suggested in responding to the 112 number, is that there is usually a discounting that has to occur to measure the expected impact on the baseline growth of 33 percent. ARTHUR D. LITTLE, INC. STUDY Chairman CALVERT. You cite that you have entered into the record a report by Arthur D. Little, Inc. It finds that DOE's energy efficiency and renewable energy programs will save 112 million metric tons of carbon in 2010. What peer review process was used by this firm? Mr. REICHER. Mr. Chairman, this has been a longstanding piece of work with Arthur D. Little since 1994, in which we have asked them to review the potential for energy savings, carbon reductions, cost savings, in our various technology R&D programs in DOE. And what Arthur D. Little does is to convene on its own a whole host of experts in the various technology areas on a yearly basis. And they analyze looking at issues about markets, technology penetrations, cost reductions. They evaluate where they realistically think these technologies are going and come up with the estimates that we were to receive on an annual basis. So it is a very substantial peer review process, and, in fact, I think Dr. Hakes has indicated that they highly respect and value the Arthur D. Little work. I will say on the issue of the savings in 2010, in the report on page 6, we list the savings in 2 different fashions: both a non-integrated total of 112 and a so-called integrated total of 75 million metric tons. So we are very careful to indicate it in both respects to make sure we take account of potential overlaps in the impasse. Chairman CALVERT. I-question on the isn't it true that the Arthur D. Little Company is provided with various agreements through DOE contracts totalling over almost $50 million? Mr. REICHER. The department does technology work with Arthur D. Little, as we do with many, many companies. What Arthur D. Little does in the case of this analytical work is, as I have said, to convene a group of outside experts to review the potential for savings in energy reductions. I also want to indicate, Mr. Chairman, that we have undertaken this Arthur D. Little work, in part, in response to Government Performance and Results Act, GPRA, where we have been asked to look more carefully at the results we are getting from our investments, particularly as we formulate our budget. So a combination of-we are quite confident about this A.D. Little work and the independence of the peer review that is being carried out. I think |