February 25, 2003
Senate Energy and Natural Resources Committee
Statement of Energy Secretary Spencer Abraham

Introduction
Mr. Chairman and Members of the Committee, it is a pleasure to be here today to discuss the President's Fiscal Year 2004 budget request for the Department of Energy. In doing so, I want to stress the ways this budget is going to help us accomplish our various missions related to defense, energy, environment and science.

To promote energy independence for our country, while dramatically improving the environment, we have developed an ambitious, long-term vision of a zero-emissions future free of reliance on imported energy. With this budget, we begin in earnest to research and develop advances in energy technology that will not merely reduce or ameliorate environmental challenges, but eliminate them. These technological advances will not merely contribute to our Nation's energy security but guarantee it, and will provide energy and environmental solutions not just for America, but also for the world.

The President's FY 2004 Budget of $23.4 billion for the Department of Energy (DOE) continues the Administration's commitment to ensure national defense and safeguard the Nation's energy security through advances in science and technology, as well as fulfill our obligation as environmental stewards to surrounding communities. While DOE's national policy objectives have not changed, this budget reflects a new approach toward conducting business at the Department of Energy. Reengineering efforts that we began in FY 2002 have taken shape: programmatic activities are better focused to achieve primary mission objectives; budget priorities are set with improved measurable performance criteria; and corporate management initiatives reflect aggressive implementation of the President's Management Agenda.

This Budget reflects and addresses the critical challenges we face today and will continue to face in the coming decades. I have charted a course for the Department that emphasizes DOE's critical contributions to our Nation's national security and provides forward-reaching solutions to America's energy problems. These priorities are to:
• meet our responsibilities to maintain the nuclear stockpile;
• expand and make more comprehensive our non-proliferation activities;
• accelerate the environmental cleanup program;
• develop 21st century cutting edge advanced fuel cell and alternative energy technologies;
• maintain coal as a major, affordable, domestically produced, energy resource through the Coal Research Initiative;
• build and maintain a stable and effective national defense program to respond to the guidance in the Nuclear Posture Review with special emphasis on revitalizing laboratory and production plant infrastructure;
• continue our leadership to ensure nuclear power remains a key energy resource; and
• maintain a world class scientific research capability.
The FY 2004 Budget is focused to deliver on these priorities.
As part of the Department's Strategic Planning process these priorities translate into six overlapping Departmental goals that form our core mission of National Security. All of the Department's planning and budgeting for FY 2004 drives toward these six goals:
• Maintain a safe, secure and reliable nuclear deterrent
• Control nuclear proliferation
• Reduce dependence on energy imports
• Achieve a cleaner, healthier environment
• Improve our energy infrastructure to ensure the reliable delivery of energy, and
• Maintain a world class scientific research capability
Formulation of this year's budget reflects significant management changes occurring within the Department. Guided by the President's Management Agenda and the management reforms I started in FY 2001 and incorporated more fully into the budgeting process in 2002, this budget implements integrated, long-term program planning and performance accountability. The Department is implementing a five-year programmatic and planning framework to provide an unprecedented opportunity to consider future impacts in determining current year funding priorities. This budget was formulated to deliver measurable results to reach the Department's strategic goals. This achievement is a significant step toward reaching our key goal to focus DOE activities to adhere to the primary mission of national security. By streamlining program activities and management structures, the Department of Energy will more effectively and efficiently manage and produce the results expected by American taxpayers.

President's Management Agenda and National Energy Policy Coordination
Rising to the challenge of the President's Management Agenda, the Department is beginning to improve how it manages, budgets, and plans for all programs, projects and activities. By improving management, performance, and accountability, the Department is striving for a level of performance that keeps DOE programs safe, on track, and on budget. A system of scorecards is being used to evaluate the effectiveness of various programs and allocate resources to achieve this end. Performance measures are improving to ensure that they are specific, quantifiable, concise, comprehensive, and relevant to the American taxpayer. Also, in accordance with the President's commitment to an expanded and effective electronic government, DOE is centrally managing information technology investments and other capital assets to reduce waste, increase productivity and provide increased services at lower cost.

Research and Development Investment Criteria. The President's Management Agenda calls for consistent and sufficient evaluation of future research and development (R&D) investments and past performance. In response, the Department developed internal guidance for programs to score their R&D activities against the Administration's applied R&D investment criteria. This approach focuses R&D dollars on long-term, potentially high-payoff activities that require Federal involvement to be both successful and achieve public benefit. The Department will continue to work to develop consistent scoring and benefits estimation methods, to permit comparison of applied R&D programs across the Department.

The applied R&D scorecard process is an important way the Department is integrating performance into the budget. The scorecard process is in its second year of development. The goal is to develop high analytical justifications for applied research portfolios in future budgets. This will require the development and application of a uniform cost and benefit evaluation methodology across programs to allow meaningful program comparisons.

The Department's Science programs also participate in the government-wide effort to evaluate basic research efforts against the criteria of quality, relevance, and performance. As a part of this first year effort for basic research programs, the Office of Science has incorporated the principles of the investment criteria into the formulation of its congressional budget narrative.

Program Assessment Rating Tool. In addition to the use of R&D investment criteria, the Department implemented a new tool to evaluate the management effectiveness of selected programs. The Program Assessment Rating Tool (PART) was developed by the Office of Management and Budget (OMB) to provide a standardized way to assess the effectiveness of the Federal government's portfolio of programs. While OMB's objective for FY 2004 was to evaluate 20% of each government agency, the Department of Energy reviewed nearly 60% of its activities through the PART process. The Departmental elements that participated were: Environmental Management; Science; Fossil Energy; Nuclear Energy; Energy Efficiency and Renewable Energy; the Power Marketing Administrations; and the National Nuclear Security Administration.

The structured framework of the PART provides a means through which programs can assess their activities differently than through traditional reviews. While some of the programs received less than favorable scores, the information exchange between the Department and OMB proved quite valuable. The current focus is to establish outcome- and output-oriented goals, the successful completion of which will lead to benefits to the public, such as increased national security and energy security, and improved environmental conditions. The Department will incorporate feedback from OMB into the FY 2005 budget and planning process, and will take the necessary steps to continue to improve performance. The results of the reviews are reflected in the Department's FY 2004 Budget. The refocusing of the Fossil Energy Oil and Gas program was supported by the results of the PART review.

National Energy Policy Office: The Department of Energy has established a National Energy Policy Office to provide strategic direction within DOE and, together with the Office of the Vice President, overall coordination within the Federal Government with respect to implementing national energy plan recommendations and activities to assure dependable, affordable and environmentally responsible production, delivery and use of energy. This Office's mission is to achieve measurable performance results and consistency in implementing our national energy goals through effective policy development, planning and management strategies that are integrated into DOE's budgeting process and that foster interagency and intergovernmental coordination, generate public-private collaboration and enhance international cooperation. Through such coordination and integrated policy planning and budgeting, the Office will assure performance results that advance and safeguard our national energy security objectives by (1) assuring access to reliable and affordable energy supplies through a balanced and diversified portfolio of energy sources and modernization of energy infrastructure; (2) securing continuous improvement in energy efficiency and conservation through technology research development and deployment to manage effectively and extend our energy resources, reduce demand and lower costs; (3) assuring environmental progress and sustainable growth; and (4) assuring that a robust market guides pricing, technology deployment, energy efficiency, fuel selection and energy systems.

Reducing Dependence On Energy Imports
The FY 2004 budget request implements many of the recommendations of the President's National Energy Policy (NEP) that emphasize federal investment on future energy solutions. This budget was formulated using a rigorous performance evaluation process as directed in the President's Management Agenda, to focus research and development resources where they make the most difference. As a result, the FY 2004 request for energy programs maintains high performing energy programs focused on the Nation's energy future. Hydrogen as a source of energy supply holds the promise of an ultra-clean and secure energy option for America's future. Another longer-term potential energy solution still at the level of basic scientific pursuit is fusion energy, which if successful, could help reduce the Nation's reliance on energy imports.

President Bush spoke of the remarkable potential of hydrogen as the transportation fuel of the future in his State of the Union Address. This Administration is determined to move us forward to a world in which new, abundant, safe and clean fuels replace our current energy sources.

The President's new Hydrogen Fuel Initiative, together with the FreedomCAR initiative, announced one year ago to develop hydrogen fuel-cell technology for vehicles, will dramatically increase our investment in the complex research and development effort to produce a personal transportation fleet powered by hydrogen fuel cells, and the infrastructure to support it. It will, to borrow the striking image used by the President, make it possible for the first car driven by a child born today to be powered by hydrogen, and pollution-free.

The FY 2004 Budget proposes $169 million to continue to implement FreedomCAR to bring a full range of emissions-free, affordable cars and light trucks closer into being. The companion initiative, Hydrogen Fuel, focuses on the supply side of hydrogen power - to conduct the research and development necessary to help industry establish a delivery infrastructure and to resolve storage issues. With the proposed total funding of $272 million for Hydrogen Fuel and FreedomCAR initiatives in FY 2004, DOE will help lead in the design and development of the technologies and infrastructure needed to create a new energy future.

Our Hydrogen Fuel and FreedomCAR partnerships represent public-private sector efforts of great complexity. The participation of government is important for coordinating the high-risk R&D work of numerous private sector partners and our national network of science laboratories. Government coordination will help resolve one of the difficulties associated with the development of a commercially viable hydrogen fuel-cell vehicle: the "chicken and egg" question. Which should come first, the vehicle, or the infrastructure of manufacturing plants, distribution and storage networks, and the convenient service stations needed to support it? Our hydrogen programs answer the question by proposing to help industry in developing both the vehicle and the infrastructure in parallel, by conducting research and development on critical technical issues. By so doing, we believe that we can advance industry's commercialization decision by 15 years, from 2030 to 2015.

Our hydrogen programs are exactly the right kind of effort for government to invest in because we believe that the potential public benefits of a hydrogen personal transportation fleet are so large compared to the costs. The hydrogen programs will tangibly, and positively, affect the life of every single American, beginning with the cars we drive and extending to the way we heat our homes and power our businesses. The public benefits we expect include increased energy security through decreased dependence on oil imports, and improved environmental conditions.

The achievements of the FreedomCAR and Hydrogen Fuel programs will come from the private sector, which will create the products that ultimately must win favor in the free market. The Federal government will assist, aid, coordinate, sponsor, and fund. But we will not pick one technology over another, or insist that our partners follow a path we dictate.

Over the next five years, we plan to request approximately $1.7 billion for FreedomCAR and the Hydrogen Fuel Initiative. Our FY 2004 Budget nearly doubles FY 2003 spending for our hydrogen and fuel cell R&D partnerships with the private sector. We have drawn a roadmap to zero emissions and energy independence with the hydrogen programs, and we plan to vigorously pursue this exciting ride into the future. The funding will be focused on overcoming the daunting challenges of fuel cell cost; hydrogen production using fossil fuels, nuclear energy and renewable energy sources; on-board hydrogen storage; infrastructure; and development of uniform codes and standards.

There is a great deal of work to be done, but the promise of these programs is real and achievable. Hydrogen presents us with the possibility of a transformed transportation sector, along with many other possible commercial, residential and industrial applications.

Fusion Energy: Nuclear fusion, the physical process that powers the sun, is an energy source of the future that could transform the way we produce electricity. By reproducing the sun's process for transforming matter into energy, we may be able to create a new energy source that would produce no greenhouse gases or other polluting emissions, produce no high-level nuclear waste or fissionable materials, and be extraordinarily safe to operate. And, if successful, fusion power could have a prominent role in the production of hydrogen later in this century.

Fusion's potential is too great to ignore and this Administration wants to grasp it by rejoining the International Thermonuclear Experimental Reactor (ITER). ITER is an international fusion energy research and development project designed to take the next major step in the development of fusion energy. The Department of Energy is the lead U.S. agency in this effort. We have dedicated $12 million within the Fusion Energy Sciences program budget for FY 2004 to support research directly tied to our participation in the ITER projects. ITER will be one of the world's largest international cooperative research and development project. It will take about 10 years to build at a cost of approximately $5 billion. It is expected to operate for about 20 years.

We estimate our investment in ITER over the next 10 years will total $500 million, plus contingency and inflation. This is obviously a major investment that reflects the seriousness we attach to this venture into new realms of scientific understanding. There is enormous potential in fusion, and we want to lead in its development with our ITER partners.

Weatherization & Intergovernmental Activities: In FY 2004, we are requesting $357 million for Weatherization & Intergovernmental Activities, $2.5 million less than our FY 2003 budget request.
The Weatherization and Intergovernmental Program activities support the President's National Energy Policy recommendations for rapid deployment of clean energy technologies and energy efficient products. The program's funding request also supports the President's commitment to increase funding for the Weatherization Assistance Program, which improves the energy efficiency of dwellings occupied by low-income Americans, by $1.4 billion over ten years.

Our Weatherization Assistance Program request ($288.2 million, $11.1 million above the FY 2003 amended budget request) supports weatherization of approximately 126,000 low-income homes. Based on historic data, the program anticipates that low-income families will save $1.80 in energy costs for every dollar invested over the life of the efficiency improvements. The Weatherization Assistance Program was assessed using the Administration's PART and was rated Moderately Effective.
Nuclear Energy: Over the last thirty years, nuclear power has risen to become the second most important source of electric energy in the United States and at the same time, the most operationally economic. The benefits of nuclear power as a clean, reliable and affordable source of energy are key to the economic and environmental underpinnings of this Nation. A central mission of the Department's nuclear program is to help enhance the basic technology and through some of the most advanced civilian technology research conducted today, chart a course to the next leap in technology. In FY 2004, we are proposing a $388 million investment in nuclear research and development and for the Nation's nuclear science, technology, and education infrastructure.
This budget request responds to the President's priorities to deploy new generation capacity to fortify U.S. energy independence and security while making significant improvements in environmental quality. It continues the important work started over the last two years to deploy new nuclear plants in the U.S. by the end of the decade, to develop advanced, next generation nuclear technologies and proposes exciting new priorities -- a new Nuclear Hydrogen Initiative to use high temperature nuclear energy systems for clean hydrogen production as part of the President's new hydrogen fuel initiative.

With these successes, we are able to pursue research that can optimize the use of the first repository and possibly reduce the need for future repositories. For years, countries around the world have pursued advanced technologies that could treat and transmute spent nuclear fuel. For the last three years, the U.S. has been a participant in this research. As one of my capstone initiatives, the FY 2004 budget request proposes an aggressive research and demonstration program, the Advanced Fuel Cycle Initiative, to explore advanced, proliferation-resistant fuel treatment technologies, fuels, and fuel cycle technologies. These same technologies offer benefits of enhancing national security by reducing inventories of commercially generated plutonium and enhancing energy independence by recovering the energy value contained in spent nuclear fuel.

However, in order to realize the full potential of this program and create waste forms that are sufficiently clean of long-lived, highly toxic species, to significantly reduce the time in which the material is hazardous, the efforts of AFCI must be integrated with advanced reactor research and development underway as part of our Generation IV nuclear energy systems initiative.
Two years ago, we launched the Generation IV program with nine other leading nuclear nations to develop advanced reactor technologies for commercial deployment after 2010 but before 2030. These reactor technologies offer significant advances in the area of sustainability, proliferation-resistance and physical protection, safety and economics. The international community has converged on six promising technologies for possible joint development, which include two gas-cooled, two liquid-metal-cooled, a molten salt-based reactor concept. While the Department has not yet decided upon which of these technologies it will eventually focus, all of the technologies are of considerable interest.

The Generation IV initiative is also closely linked to our new Nuclear Hydrogen Initiative, aimed at demonstrating economic commercial-scale production of hydrogen using nuclear power as early as 2015. The use of hydrogen using high temperature advanced reactors such as advanced gas-cooled or liquid metal cooled reactors can provide the heat necessary for the process. These technologies offer the potential for large-scale, emission free, hydrogen production, key to providing for our Nation's long term energy security and reducing reliance on imported oil. Today, through electrolysis, we can convert water to hydrogen using electricity, but we believe that for the future, high temperature nuclear energy systems coupled with thermo-chemical water splitting processes offer more efficient technology for the production of large quantities of hydrogen without the release of greenhouse gases. Finally, this budget request allows the realignment of the mission of the Idaho National Engineering and Environmental Laboratory, revitalizing the site as the Department's leading center of nuclear research and development. While environmental cleanup remains a priority at INEEL for the next few years, the longer term focus of the site will transition to nuclear R&D, in areas such as Generation IV technologies, advanced fuel cycle technologies, and space nuclear power and propulsion technologies. This budget request contains more than $100 million within the Office of Nuclear Energy, Science and Technology budget for the INEEL infrastructure, security, and for research.

Achieve A Cleaner, Healthier Environment
Protecting the environment is compatible with increasing the supply of dependable, secure energy. President Bush said: "Sustained economic growth is the solution, not the problem, because a nation that grows its economy is a nation that can afford investments and new technologies." By harnessing the power of American science and technology, we can achieve both energy independence and a cleaner, healthier environment. The FY 2004 Budget embodies a commitment to current and future generations of Americans to accelerate the cleanup of environmental damage resulting from Cold War nuclear programs, reduce the polluting effects of energy sources, and develop secure energy technology options for the future.

Environmental Management: The budget request for Environmental Management (EM) activities totals $7.2 billion, approximately 5 percent above the comparable FY 2003 request and the FY 2003 appropriation, to accelerate risk reduction and closure. This is the highest amount ever requested for these programs. Although only a small portion of this activity is within the jurisdiction of this Committee, I would like to highlight these within the context of the entire program budget. The request includes:
• Defense Site Acceleration Completion ($5.8 billion)
• Defense Environmental Services ($995 million)
• Non-Defense Site Acceleration ($171 million)
• Non-Defense Environmental Services ($292 million)
• Uranium Enrichment Decontamination and Decommissioning Fund ($418 million)

The Environmental Management program was created in 1989 to safely manage the cleanup of the environmental legacy from 50 years of nuclear weapons production and nuclear energy research at 114 sites around the country. The scope of the program includes stabilization and disposition of some of the most hazardous materials known. In February 2002, the EM program released a Top-to-Bottom Review, which revealed that process rather than cleanup results had been the basis for performance and cleanup approaches.

Following this review, the EM program committed to devote the next eighteen months to developing and implementing several key management reforms that would drive accelerated risk reduction and project completion. In one year, we have begun developing and implementing four management reforms, which serve as the basis for the EM program's accelerated risk reduction cleanup initiatives. These reforms are:
Acquisition Strategy- We are implementing a strategy that will both increase competition by enlarging the pool of potential contractors competing for our work and increasing the accountability of our contractors to deliver real, meaningful cleanup.

Configuration Control- EM has begun implementing a strict configuration management system that baselines a number of key, critical program elements, such as Performance Management Plans, EM corporate performance measures, and life-cycle costs. Strict configuration control and monitoring of these key elements will facilitate a high confidence level that the goals and direction of the accelerated cleanup initiatives are being met.
Human Capital- This reform strongly supports the President's Management Agenda. EM is building a more robust organizational and performance accountability system that holds each manager and employee accountable for actions and results. Individual performance management is being fully integrated into EM organizational goals. We have completed two phases of senior executive reassignments between both the Field and Headquarters.

New Budget Structure- We have developed and begun implementing a new budget structure, which complements other management reform initiatives by focusing on completion and endpoints, and communicating EM's goals and objectives. The new budget structure clearly identifies scope and resources that directly support the accelerated cleanup and risk reduction mission.

Since the release of the Top-To-Bottom Review, significant progress has been made with respect to these management reforms. In addition, EM has made efforts to identify and implement changes in ten areas emphasized in the Top-To-Bottom Review that are critical to the success of the program. EM has focused these activities into special projects, each with a complex-wide perspective. Successful execution of these projects is crucial to improving the performance of the program and eliminating many of the barriers that have hindered previous initiatives to accelerate cleanup and reduce life-cycle cost.
In FY 2004, the EM program will continue making progress in implementing management reforms and making changes in the areas emphasized in the Top-To-Bottom Review. The EM FY 2004 Budget request has been tailored to meet our mission of accelerated risk reduction and completion. The most impressive aspect of this budget is that it fully reflects each site's new accelerated risk reduction and cleanup strategies. The strategic groundwork has been laid and the EM program is moving forward. Through the implementation of accelerated cleanup strategies, the EM program anticipates that cleanup will be completed at least 35 years earlier than originally anticipated (2035) and life-cycle savings of greater than $50 billion will be achieved. The budget, in addition to accelerating our current programs, includes $90 million for the construction of new facilities for the conversion of depleted uranium hexafluoride at our two gaseous diffusion plants at Paducah, Kentucky and Portsmouth, Ohio.

Civilian Radioactive Waste Management: The President's February 2002 recommendation and Congress' July 2002 approval of Yucca Mountain, Nevada as the Nation's high level nuclear waste repository was a seminal step in advancing the Department's goal to ensure the safe and secure disposition of dangerous nuclear materials away from the hands of terrorists. The budget requests $591 million for the Department's repository program. This request coupled with the FY 2003 requested amount would support the completion of work needed for the submission of a license application to the Nuclear Regulatory Commission in 2004 and the development of transportation capabilities needed to initiate repository operations by 2010. However, the $131 million reduction from the President's FY 2003 budget request together with the four month-long continuing resolution, has introduced a high risk in our ability to meet a December 2004 license application date. We are assessing the impacts of this reduction in terms of additional funding needs to close the FY 2003 budget shortfall.

National Climate Change Technology Initiative (NCCTI): The FY 2004 Budget includes $40 million to continue support for the competitive solicitation program under the NCCTI proposed in the FY 2003 amended budget. This unique program will spur innovation through competition based on various technologies' potential to reduce, avoid, or capture greenhouse gas emissions. Because of the diverse energy technologies involved, the expanded competitive solicitation program will cut across three programs in the Department in the FY 2004 request: $24.5 million is proposed within the portfolio of the Energy Efficiency and Renewable Energy activities ($15 million in renewable energy and $9.5 million in energy conservation); $2.3 million is proposed within the Nuclear Energy Science and Technology program; and $13.2 million is proposed in the Fossil Energy program. These collaborative programs will focus climate change research and development investments on high-priority areas, where breakthrough technologies can slow the growth in greenhouse gas emissions, and selecting projects based on their ability to contribute to greenhouse gas mitigation.

The President's Coal Research Initiative. The FY 2004 Budget continues to meet the President's commitment to spend $2 billion on clean coal research over 10 years by providing $320.5 million for the President's Coal Research Initiative. This request for coal research is over two and one-half times the average request from 1995-2000. Since last year, the Department has made significant progress on a new generation of environmentally-clean coal technologies.

Our "first round" solicitation in the Clean Coal Power Initiative - the centerpiece of the President's clean coal commitment - attracted three dozen proposals for projects totaling more than $5 billion. On January 15, 2003, we announced the first winners of this competition - eight projects with a total value of more than $1.3 billion, more than one billion dollars of which would be provided by the private sector. Industry has again stepped to the table, offering both good ideas and significant private sector cost-sharing.

In FY 2004, we are requesting $130 million as the next "installment" of the Clean Coal Power Initiative. The President's Clean Coal Power Initiative is especially significant because it directly supports the President's Clear Skies initiative. The first projects, for example, included an array of new cleaner and cheaper concepts for reducing sulfur dioxide, nitrogen oxides, and mercury - the three air pollutants targeted by the Clear Skies initiative. To ensure that even more effective pollution control concepts continue to emerge as candidates for future clean coal competitions, we are requesting $22.0 million for research into even cleaner and more affordable innovations for existing plants.

Northeast Home Heating Oil Reserve: We are requesting $5.0 million for the Northeast Home Heating Oil Reserve. The $3.0 million decrease from last year's request reflects cost savings realized from recompeting our commercial storage contracts. The 2-million barrel reserve remains ready to respond to a presidential order should there be a severe fuel oil supply disruption in the Northeast. A key element of this readiness is a new online computerized "auction" system that we implemented during the last year to expedite the bidding process. Installing and testing the electronic system (including tests with prospective commercial bidders) has been a major element of the Office of Fossil Energy's role in implementing the "e-government" initiatives in the President's management agenda.

Improving Our Energy Infrastructure
Failure to meet increasing energy demand with increased energy supplies and vulnerability to disruptions from natural or malevolent causes could threaten our Nation's economic prosperity, alter the way we live our lives, and threaten our national security.

DOE will continue assist in meeting this homeland security challenge. To that end, the FY 2004 budget proposal maintains an analytical capability to support the Department's energy security responsibilities. Included in the budget is $4.3 million for Energy Assurance activities to continue to support energy security activities led by the Department of Homeland Security. This is a key concern underlying the President's NEP recommendations.
The FY 2004 Budget includes a breadth of activities that will help improve the Nation's energy infrastructure. The Distributed Energy and Electric Reliability Program supports research, development, and deployment of electric reliability technologies that will upgrade America=s aging electric power infrastructure during the transition to competitive electricity markets. The FY 2004 budget request is $76.9 million for Electric Reliability to develop technologies that will relieve congestion on transmission and distribution systems, reduce consumption and increase energy supplies during periods of peak demand, accelerate the introduction of advanced systems to improve the efficiency of market operations, and reduce environmental emissions, including greenhouse gases. In FY 2004, the Electric Reliability activity will complete a national interest transmission bottleneck assessment to identify congestion on the transmission system and work with regions, states and localities to remove bottlenecks where benefits outweigh the costs. In addition, the activity will work with transmission operators to deploy real time monitoring and control technologies to operate the existing grid more reliably and electricity markets more efficiently. The Department also proposes $47.8 million for the High Temperature

Superconductivity (HTS) activity to improve the reliability of transmission system components through the development and testing of the 100-MW prototype HTS generator, new designs of HTS power cables, and the 10-MW prototype HTS transformer.
As directed by the NEP, DOE will continue to work to remove constraints on the interstate transmission grid to help ensure that our Nation's electricity can flow more freely. In FY 2004, DOE and its Power Marketing Administrations (PMAs) will continue efforts to help ease the West Coast energy problems and help meet the region's long-term power and infrastructure needs. Last fiscal year, the Department's Western Area Power Administration participated in negotiations with two private companies to secure private sector financing for construction of "Path 15" transmission facilities that will relieve the critical transmission bottleneck between northern and southern California. This project, scheduled to be operational in late 2004, will reduce the likelihood of blackouts in Northern California. Finally, each PMA continues to work directly in the development of regional transmission organizations in response to the Federal Energy Regulatory Commission's Order 2000. This activity is consistent with the Administration's support for competitive wholesale electric energy markets.

Maintaining A World Class Scientific Research Capacity
We propose to spend $3.3 billion in FY 2004 on our Science programs. The Science budget will fund real, programmatic increases of over $170 million, due in large part to the planned completion of construction projects which will occur this year.
The FY2004 budget request for the Office of Science supports the President's goal of ensuring continued U.S. leadership in science, and will enable the Office of Science to continue to support the Department's missions in energy, environment and national security. The Office of Science has provided approximately 40 percent of all federal funds in the physical sciences over the past decade. It is also the steward, and by far the principal funding agency, of the Nation's research programs in high-energy physics, nuclear physics and fusion energy sciences, as well as being the federal government's largest single funder of materials and chemical sciences. The Office of Science also supports unique or critical pieces of U.S. research in scientific computation, climate change, geophysics, genomics, and the life sciences. This research is conducted at both the Department's national laboratories and at approximately 250 universities nationwide. The Office of Science manages the construction and operation of some of the Nation's most advanced research and development facilities - a vital part of the Nation's scientific infrastructure used by over 18,000 researchers annually.

The Administration's FY 2004 evaluation of the Office of Science found that it had clearly defined purposes and was generally well managed, and cited its process of external reviews of construction projects as a "…widely recognized effective practice." The Office is automating many of its routine operations and by the end of FY 2004, 100% of grant and contract proposals will be received electronically. The Office is now in the process of implementing a restructuring to improve oversight of our laboratories by removing a layer of line management and instituting clear chains of responsibility, in accordance with the principles of the President's Management Agenda.

The Office of Science FY 2004 budget request is $3.311 billion, slightly higher than the FY 2003 request. The Office of Science research programs are managed in six major areas, and also include a restructured and enhanced effort in science education. Let me now address some highlights within the Office of Science budget.

The capabilities of terascale computing are transforming the conduct of science, bringing scientific simulation through computational modeling to parity with theory and experiment as a scientific tool. The Office of Science's program in Advanced Scientific Computing Research is at the center of efforts to realize the full potential of scientific simulation to solve mission related problems. In FY 2004, $14 million is dedicated to a new Next Generation Architecture program to optimize computer architecture to meet the special requirements of scientific problems. This effort will include both evaluation of the impact of alternative architectures on application performance, and software research on next generation operating systems.
The FY 2004 request for the Office of Science's Basic Energy Sciences program increases funding for the President's initiative in nanoscience by $64 million, to $193 million. This will allow construction to proceed on a Nanoscience Research Center at Oak Ridge National Laboratory, as well as new construction of Nanoscience Research Centers at Lawrence Berkeley National Laboratory and Sandia National Laboratory in partnership with Los Alamos National Laboratory. The FY 2004 request continues funding for construction of the Spallation Neutron Source, which, following a rebaselining and rescoping exercise in 2001, is now on budget and schedule for completion in June of 2006.

The FY 2004 budget request for the Office of Sciences Biological and Environmental Research program provides $59 million, an increase of $24 million, for the continued growth of the Genomes to Life program, and $25 million, an increase of $22 million, for the Climate Change Research Initiative. This initiative will extend research in climate modeling, atmospheric composition and the regional impacts of climate change.

The High Energy Physics program supports almost 90 percent of U.S. research in high-energy physics. This research has the goal of developing a deeper understanding of the basic nature of matter, space, time and energy. The FY 2004 request will reflect an increasing emphasis on non-accelerator-based research projects. Funding will be increased for the Supernova Acceleration Probe at Lawrence Berkeley National Laboratory, a space-based experiment to explore the nature of "Dark Energy," an unknown force that is accelerating the expansion of the universe.
The Department's nuclear physics research program is the principal sponsor of nuclear physics research in the U.S., providing 85% of federal support. This research seeks a deeper understanding of the properties of nuclear matter. To support recent results from neutrino physics experiments, which point to new physics beyond the Standard Model, FY 2004 funding has been increased to support non-accelerator-based experiments used to investigate the physics of neutrinos in international collaborations at the Sudbury Neutrino Observatory, KamLand and elsewhere.

In response to the President's call for a "qualified teacher in every classroom," in FY 2004 the Office of Science will begin in FY 2004 a pilot program at Argonne National Laboratory, funded at $1 million, to exploit the resources of the national laboratories to provide 4-8 weeks of professional development for K-14 science and mathematics teachers, competitively selected and matched with laboratory mentors working in their field of instruction. Intensive follow-up and performance measures will be applied to assess the results of this pilot. This initiative will help improve the quality of instruction in science and mathematics, and address a critical national problem, developing a technically trained and educated workforce for the 21st century.

Conclusion
Mr. Chairman and Members of this Subcommittee, that concludes my prepared statement. I will be glad to answer any questions you may have at this time.