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A Reminder of FERC's Role on the Eve of Two Appointees' Confirmation Hearings

Allison Clements

Posted May 19, 2014

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Tomorrow, a Senate Committee will consider the confirmation of President Obama’s latest choice to head the Federal Energy Regulatory Commission (FERC), which regulates the transmission grid, wholesale sales of electricity and pipeline infrastructure.  

You may remember (for me, it’s hard to forget) that the Senate Energy and Natural Resources Committee held a similar confirmation hearing last September to consider the ultimately failed nomination of the president’s original choice to fill the FERC chair slot – Ron Binz – vacated with the resignation of Jon Wellinghoff. Thankfully, the indecorous fact-twisting and misleading messaging on display around the Binz nomination (in large part outside the Senate hearing room) seems mostly lacking going into tomorrow’s hearing – when the committee will consider the nomination of Norman Bay as the new chair and also the renomination of acting FERC chair Cheryl LaFleur to another term as commissioner.

My memories of last September prompt me to clarify just what FERC does – and does not do – when  it comes to the nation’s electric transmission grid, what role it can play in energy policy, and what questions should be asked of Mr. Bay during the confirmation process.

FERC can’t pick winners or losers. FERC’s authority under the Federal Power Act does not allow it to prefer any one type of power resource over another. In fact, the law requires just the opposite – FERC’s job is to level the playing field so that all types of generating resources can duke it out in the marketplace. By default, grid rules developed over the last 75 years mostly favor fossil-fueled generation that has been around all that time. But, over the last decade FERC has removed some barriers to the integration of wind and solar power. These changes attempt to ensure fair opportunities for wind and solar to compete with fossil and nuclear power, not to favor cleaner resources. We at the Sustainable FERC Project, a coalition of environmental organizations, are working to make sure that wind and solar power and energy efficiency can play a large part in how we generate electricity in this country. So, we care that FERC’s rules are not discriminatory towards these cleaner resources.

FERC can’t impose a carbon tax (or any environmental policy, for that matter). FERC is not an environmental agency – the Federal Power Act under which FERC was created exists to ensure that customers have fair opportunity to connect to the grid and pay only fair prices for that access and for energy. FERC is also obliged with ensuring reliability in the face of a changing generating portfolio. 

FERC can’t “kill” coal. Again, FERC can’t prefer one type of resource over another. The markets, specifically the low cost of natural gas and cleaner energy resources, are the biggest driver of recent coal unit retirements. Clean air and water regulations are driving additional retirements (mostly of otherwise economically vulnerable coal units). FERC is involved, however, in ensuring the maintenance of reliability when coal generators decide to retire and has a strong track record to date.

Tomorrow’s hearing - LaFleur’s proven record.

Acting chair LaFleur continues to demonstrate mastery in the handling of reliability issues related to the polar vortex and more broadly, and also supports the removal of unfair barriers to resource integration. The Sustainable FERC Project supports her renomination.

So, what should the senators be asking Mr. Bay?

  • Will you continue FERC’s practice of supporting competition by removing regulatory barriers to the integration of all types of energy resources?
  • Will you pursue a strong reliability agenda that recognizes the reality of a power mix that is becoming cleaner and more efficient?
  • Do you support the requirement that grid operators plan, in advance, for the impact of public policies on the grid, so that costs don’t get out of control?
  • Will you support states’ rights to develop and pursue policies like renewable energy standards?
  • Will you recognize the reliability value that cheaper, cleaner resources like energy efficiency and rooftop solar can provide to the grid?
  • Do you support FERC’s historically bipartisan approach to addressing reliability concerns and other issues?

We hope that Norman Bay will answer YES to all of these questions. The more he answers in the affirmative, the more strongly the Sustainable FERC Project coalition will support his confirmation.

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Comments

Michael BerndtsonMay 20 2014 10:45 AM

Here's another question(s) for FERC:

What direction is domestic natural gas going in pipelines? Will it go from or to many of the proposed and planned liquid natural gas (LNG) plants? Specifically, will it be pipelined domestic use or liquified and shipped for overseas sales?

Attached to this excellent question (the only questions I ever ask) is this interesting article for further details:

"Moody’s: LNG, power demand driving shift in US gas flow"

http://fuelfix.com/blog/2014/05/14/moodys-lng-power-demand-driving-shift-in-us-gas-flow/

cut and pasted from the article:

"The latest wave of pipeline projects shows that producers in the Marcellus Shale want options. They've already saturated northeastern markets and want to send natural gas north to Canada and west to Chicago. And they especially want to go south, where liquefied natural gas export terminals are planned or under construction, and where states are building new gas-fired power generation, said Mihoko Manabe, an analyst and senior vice president with Moody’s Investors Service in New York."

Maybe that one commenter knows.

A Proud CanadianMay 20 2014 11:03 PM

Hi Allison,

Let me first say that I would love to see further development and integration of renewables into our collective “grids”. I applaud the fact that the FERC can’t pick winners or losers. As you say, FERC’s authority under the Federal Power Act does not allow it to prefer any one type of power resource over another. In fact, the law requires just the opposite – FERC’s job is to level the playing field so that all types of generating resources can duke it out in the marketplace.

The majority of the article (and suggested questions) then seems to bias itself towards renewables, when in fact you talk level playing fields. I believe this voids the integrity of the answers. I believe removing the bias will help. Are the following questions just as relevant? Should some be added? Please excuse me as these are just slightly altered versions of your original list:

So, what should the senators be asking Mr. Bay?
• Will you continue FERC’s practice of supporting competition by removing regulatory barriers to the integration of all types of energy resources? (unchanged)
• Will you pursue a strong reliability agenda that recognizes the reality of a power mix that is possibly becoming cleaner and possibly more efficient even if these power sources are from continued use or increased use of fossil fuels?
• Do you support the requirement that grid operators plan, in advance, for the impact of public policies on the grid, so that costs don’t get out of control? (unchanged)
• Will you support states’ rights to develop and pursue policies like renewable energy standards even though it explicit in your mandate not to do so? Will you support states’ rights to pursue policies increasing the use of coal, oil, or natural gas (again, even though it explicit in your mandate not to do so)?
• Will you recognize the reliability value that cheaper, cleaner resources like energy efficiency and rooftop solar can provide to the grid (again, even though it explicit in your mandate not to do so)? If solar is not cheaper, will you do this? If any renewable or non-renewable is not cheaper will you do this?
• Do you support FERC’s historically bipartisan approach to addressing reliability concerns and other issues? (unchanged)

I hope that you understand where I’m coming from. Those opposed to renewables will see the bias and immediately discount the results of the questioning. If Mr. Bay can be allowed to show a lack of bias then you are further ahead I think.

Regards,
A Proud Canadian

Michael BerndtsonMay 21 2014 09:31 AM

A Proud Canadian,

Since your handle is a proud Canadian and assuming you're not here to bootleg clandestine Rob Ford videos, I'm going to assume your angle (bias) is tar sands pipeline promotion. Why else would a proud Canadian jump into another country's policy (sausage making) debate on pipeline oversight?

Over the years I've had the misfortune to partake in early development and regulatory affairs. My rule of thumb is: the person who yearns the strongest for bipartisanship, cuts deepest along the bias. It moves the center closer to their point of view, Canadian passive aggressively.

A Proud CanadianMay 21 2014 06:46 PM


Not entirely my angle (bias). I tend to try and broaden the conversation beyond the limits of a site like this. If you have read many of my comments from previous blogs you know I am a big fan of renewables.
Your second paragraph seems a bit cryptic to me. What bipartisanship? What bias? Am I off-center? And your use of the term Canadian passive aggressively just doesn’t make sense. Perhaps you haven’t read previous comments of mine. Could you explain this more clearly please?

Regards,
A Proud Canadian

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