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Remarks at National League of Cities Congressional City Conference

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Tuesday, March 16, 2010

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Secretary of Commerce Gary Locke
Remarks at National League of Cities Congressional City Conference
Washington, D.C.

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Hello everyone. It's great to be here this week, along with so many of my colleagues from the administration.

It is so important for state and local leaders like you to be partners in helping us understand what works and what doesn't—to be America’s “laboratories of democracy.”

And we need you to be responsible stewards for the billions of federal taxpayer dollars that are allocated to state and local governments every year.

That's an especially timely thing to remember now, because the 2010 Census is underway—and that will determine how more than $400 billion in federal funds are allocated annually for everything from transportation projects and school improvements to senior services and public safety.

The census is also going to determine how many representatives every state has in Congress.

I cannot emphasize enough how important this census is, especially for urban communities, which have frequently been undercounted in the past.

This week, households across America will be receiving their 10 question Census forms.

Don Borut has done a wonderful job getting the League of Cities engaged in our census Bureau's Take 10 challenge—and I hope we can continue to keep you all engaged in the months ahead.

You can help your constituents understand how important the Census is—and how safe it is to participate.

The census is completely confidential. Information provided to the Census Bureau is protected by law from being shared with other federal agencies. Even the provisions of the Patriot Actdo not override census privacy protections.

Every constituent you convince to mail back their census forms is one less person we need to contact with door to door follow-ups—which is very expensive.

For every one percent increase in the number of people who mail back their census forms, taxpayers save about $85 million.

I ask for your help with the census, because I know that few leaders have a better feel for what's really happening in America than the people in this room.

I’m very familiar with the challenges your constituents are dealing with in this difficult economy, having served in the Washington state house for 11 years.

And let there be no doubt: putting people back to work is the number one priority of the entire Obama administration.

I know that people are frustrated that the economy is not turning around quicker.

But it’s important to be mindful of where we have come from.

Early last year, we were on the precipice of a second depression, with banks failing and the economy losing 700,000 jobs a month.

But thanks to the difficult and sometimes unpopular steps the administration took to stabilize financial and housing markets and stimulate our economy, we have returned from the brink.

One of those steps was the passage of the Recovery Act, which distributed badly needed relief in almost equal thirds of:

  • tax relief;
  • aid to states and small businesses; and infrastructure projects.

This Act has already:

  • Provided over $100 billion in tax relief for American businesses and families
  • Prevented more than $50 billion in Medicaid cuts across the country; and
  • Funded over 12,500 transportation construction projects nationwide, ranging from highway construction to airport improvement projects; and
  • Partly as a result, an economy that was shrinking by six percent a year ago is growing by nearly six percent today.

Still, we have a long way to go.

We’ve got to keep working to create a sustainable economy that provides more opportunity for everyone.

Today, I want to talk to about how the Commerce Department is helping achieve that.

And I want to close with one big idea for how all of you can help your constituents and your country stay safe and prosperous for decades to come.

Let me begin by describing in very simple terms what I see as the core mission of the Commerce Department :

Making American businesses more innovative at home and more competitive abroad so they can create good jobs in communities throughout America.

Let's start with innovation, which the Department is seeking to kickstart in a variety of ways:

We’re leading the administration's $7.2 billion effort to expand high-speed Internet access throughout the country.

Thirty-six percent of Americans do not have high-speed Internet access at home.

It is simply unacceptable for this many Americans to be without the educational, business and employment opportunities that high-speed, reliable Internet service provides.

This program is going to help fix that glaring inequality.

And it's going to help catalyze billions of dollars more in broadband investment from the private sector and local communities.

Just as the government might fund construction of a highway across a state, and then have private or local interests build the streets that branch off of it, most of our grants are funding basic broadband infrastructure that allows local providers to bring high-speed Internet directly to homes or businesses.

We’ve already provided over $ 1 billion to fund over 20,000 miles of networked, high-speed Internet lines in underserved communities throughout America.

Aside from providing badly needed Internet access, these investments are going to create thousands of good construction jobs in the near term digging trenches, laying fiber-optic cables and stringing up utility poles.

We’re now moving into the second round of funding and I would encourage all of you to make sure businesses and other groups in your communities are doing everything they can to take advantage of this.

A second step Commerce is taking to drive innovation in local communities is being run through our Economic Development Administration or EDA, which helps provide funding for communities to build critical economic infrastructure.

The president's 2011 budget includes $75 million for EDA to issue planning grants that help local communities identify their unique strengths and develop regional economic clusters.

The idea is to foster the creation of more places like Silicon Valley or the Route 128 corridor in Boston – where high growth industries are nourished by entrepreneurs, academics, venture capitalists, municipal and even state leaders all working and creating together in the same place.

These innovation hotbeds are not confined to any one part of the country. They’re thriving in places like Rochester, New York and Dubuque, Iowa and the Commerce Department is helping to create more.

Finally, as we take these important steps to spur American innovation at home, Commerce is also increasing our efforts to help our companies sell more of their goods and services to the 95 percent of the world’s consumers who live outside the United States

The Commerce Department is playing a lead role in implementing President Obama’s recently announced National Export Initiative (NEI), which aims to double American exports over the next five years and support two million jobs here at home.

This initiative is going to provide more export financing, more trade promotion assistance and more focus on knocking down the trade barriers that prevent U.S. companies from getting free and open access to foreign markets.

We’re putting small- and medium-size businesses at the center of our outreach; and I would urge any local nonprofit or government economic development organizations in your areas to get businesses involved in this effort.

What I just discussed are but a few of the many different things the Commerce Department is doing to spur economic growth and job creation.

But before I leave today, I would like to suggest one extremely important step all of you can take to unleash innovation and job creation in your communities for years and decades to come.

Of the many challenges facing America, one that I know is particularly resonant for all of you is the declining state of American infrastructure.

In particular—our electric grid—which was once named the greatest engineering achievement of the 20th century—is fraying at the seams.

Our electric grid is so inefficient that by the time electricity makes it to your plug, a full two thirds has already been lost through generation, distribution and transmission.

The system is so blind that if power goes out in your house, your utility won't even know about it unless you call them.

Every year, Americans lose $150 billion due to power outages and blackouts. That's $500 for every man woman and child.

In congressional testimony last year, the venture capitalist John Doerr remarked that he knows far more about his daughter's text messaging from his phone bill than he does about his family's electricity usage.

Imagine walking through your grocery store and buying food for your family with no idea what any of it cost, and then getting sent the bill for all of it 30 days later.

That would be a crazy way to buy groceries.

But that's what it’s like to buy electricity in America.

This problem can be fixed with your help.

Here's how.

One of the biggest reasons why the technology for our electric grid is still stuck in the 1930s is because many of the state rules that regulate electricity pricing are from the same era.

And in many states, these rules and regulations reward utilities for one thing above all else:

Cranking out cheap and dependable power for their customers.

This mandate made sense eighty years ago, when electrification was still novel.

But today, these rules are actively stifling the innovation we need to reduce consumption.

Let me just give you one example.

Let’s say a utility needs to deliver electricity to a thousand new homes, or a new office complex.

Under the prevailing rate structure in most states, the utility will be allowed to pass the costs on to consumers for building the new capacity it needs to serve the new customers.

But if the utility can meet that same added demand by reducing consumption elsewhere in the system—for instance by insulating 10,000 older homes or deploying a smart grid—they will, in most cases, have to eat some or all of the energy-saving costs.

If you’re a utility with a choice between the certain profitability of adding new capacity; or investing in better efficiency measures that not only won't be profitable, but might cost you money as your customers use less power, it’s really no choice at all.

That new capacity is getting built.

I know that those of you here today have varying degrees of influence over your utility commissions, but I would encourage you to do whatever you can to change the rules of the game so utilities can be incentivized just as much, if not more, for efficiency measures as they are for building new energy capacity.

This administration has already done quite a bit to the lay the foundation to revitalize our electric grid.

Last year's Recovery Act provided $11 billion to spur the development of a national smart grid. And one of the Commerce Department’s technical agencies is developing standards to ensure interoperability for emerging smart grid technologies.

But if you can help change some of the incentives at the state and local level, it will help pull this wave of innovation throughout utilities across the country.

Developing a smart grid is not a risky, experimental technology that we are hoping might work.

We know it works.

The smart grids' hardware and software is actually very similar to what has been used for decades to link the computers in our offices and the machines in our factories.

The technology will enable customers to see and manage their energy use in real time.

With the right regulatory reforms, it would also allow consumers to take advantage of different electricity rates at different times of day—choosing, for example to run their washing machine during off-peak hours when rates would be cheapest.

For utilities, it will offer them the chance to smooth out peaks in demand and meet new demand with better efficiency rather than costly new power plants.

And as distributed power sources like plug-in electric cars, rooftop solar panels and wind farms become a bigger part of America’s energy mix, a smart grid will enable us to deal with energy coming from a lot of sources in which some customers are consuming energy and others are feeding it back into the grid.

We've already seen very impressive examples of a smart grid in pilot projects at the local level.

For example, in North Carolina, Duke Energy linked up a small community of homes to a smart grid, and at the end of their test period, consumers were using 20 percent less energy and paying 20 percent less on their electric bill, without even noticing it.

These energy savings didn't come from consumers sacrificing their lifestyle. People didn't have to lower their thermostats to 50 degrees when it was cold or walk around their house with a candle. This 20 percent savings was all done with just smarter and more efficient energy use.

But the only way we are going to replicate this success nationwide is for local leaders like all of you to push to get the right incentives in place.

Just as the Internet spawned new industries, as well as new cutting edge jobs, making the Smart Grid a reality will create new job opportunities for thousands of Americans as they go about the business of retrofitting and upgrading our grid.

You can help make it happen.

Helping change the way your state energy commissions incentivize utilities is one of the most straightforward and impactful things you can do to set this country and your communities on a path to a cleaner and more prosperous future.

I hope its action that you will strongly consider.

Thank you.