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

photo-aclements-contributorMay 19, 2014 by Allison Clements

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.

Written by Allison Clements