Week Ending September 11, 2020

Chatterjee Discusses Transitions for Clean Energy, Competitive Markets, COVID-19

This Article Appears as Published in Foster Report No 3315
Chatterjee Discusses Transitions for Clean Energy, Competitive Markets, COVID-19

The transitions taking place in the energy sector have kept FERC busy and are not likely to slow down, while the COVID-19 pandemic has forced the Commission to pivot to remote working and consider what changes may become permanent, FERC Chairman Neil Chatterjee said September 9.

At a pair of online forums, Chatterjee addressed a range of topics generally tied to FERC’s oversight of wholesale power markets and changes at FERC as the pandemic imposed challenges on the energy industry and FERC staff. Speaking at an Edison Electric Institute (EEI) meeting and the Renewable Energy Financing Forum held by the American Council on Renewable Energy (ACORE), Chatterjee praised industry personnel and FERC staff for meeting the challenges head on and persevering under difficult circumstances.

In a discussion with Philip Moeller, executive vice president at EEI and a former commissioner at FERC, Chatterjee was asked about remote working and whether any changes implemented during the pandemic may become permanent at FERC once the pandemic subsides. Chatterjee emphasized that his focus has been and will remain keeping FERC staff safe and healthy, while ensuring that FERC functions and procedures are carried out as expected by the regulated community. He said any decisions on making remote functions permanent would be done on a case-by-case basis as a recovery towards normal operations is made.

Chatterjee expects FERC leaders to look back and assess what has been effective in the remote working environment and consider if any efficiencies could be maintained once a return to offices is made. He did not address when any return to offices would be made, and said he hopes the nation appreciates some of the “Herculean efforts” made by utility lineworkers, industry personnel, FERC staff and others that kept electricity flowing as consumers made their homes function as their workplace.

The interaction with state regulators and other agencies has been vital as the energy sector and regulators addressed changes brought on by the pandemic, including dealing with cybersecurity concerns, collaborating with the Electricity Subsector Coordinating Council and the National Association of Regulatory Utility Commissioners and staying engaged on different issues, Chatterjee said. FERC had existing relationships with such groups, but Chatterjee said he did not appreciate how important they were until the pandemic forced groups to learn from each other and gain different perspectives on challenges faced in different parts of the country.

Chatterjee told Moeller that he has actually developed stronger relationships with more people because the remote working environment allows him to be more flexible with his time and have more in-depth conversations compared with in-person meetings. Such in-person meetings are beneficial and “I’m a people person, that’s how I engage,” but online working enables more time and frequency for meeting with people through video chats that can last longer than a 30-minute meeting in an office, Chatterjee said.

Similarly, FERC staff is “extremely accessible” and it is important for the energy sector to know that they can hold pre-filing meetings remotely or seek advice from staff before making any applications or filings with the Commission. Just because the FERC headquarters building is closed, there is no less ability for stakeholders to engage and connect with FERC, Chatterjee said.

Moeller said state regulators are growing in importance for what the power grid of the future will look like, and Chatterjee agreed, while pointing to FERC Order 841 on energy storage as a game-changer that may be one of the achievements he’s most proud of during his time at FERC. FERC split the storage order from a proposed rulemaking on aggregated distributed energy resources (DER), and the U.S. Court of Appeals for the D.C. Circuit upheld Order 841, which was important, Chatterjee noted.

“I’m bullish on technologies like storage” and “I’m really excited about the potential” for storage to provide a cost-effective solution to transmission investments, though all types of grid enhancements will be needed in the future, Chatterjee told Moeller.

In a September 8 statement on becoming the first independent system operator to allow full participation of storage resources, the New York ISO said the state’s action culminates a years-long process to enable storage resources to participate in the wholesale energy market. The use of storage will help the New York ISO meet the aggressive clean energy mandates of the Climate Leadership and Community Protection Act in the state, which calls for New York to obtain 70% of its power from renewable resources by 2030 and have zero carbon emissions by 2040, the grid operator said.

The use of storage in New York will open up new revenue streams and attract more private investment in storage resources, while limiting risks for consumers, said Rich Dewey, president and CEO of the New York ISO.

In his comments at the ACORE meeting with Greg Wetstone, president and CEO of the group, Chatterjee said ISO implementation of Order 841 will provide real benefits to consumers. Now that the court has upheld the order, a rulemaking on aggregated DER may be coming in the near future, Chatterjee said. On Twitter shortly after he spoke at the ACORE meeting, Chatterjee hinted that such a step may be soon, perhaps during the September 17 meeting.

While New York ISO is making progress on storage, the grid operator’s proposal for buyer-side market power mitigation was shot down at FERC September 4 in a decision that has been criticized as harmful for renewable resources and federal/state relationships. The majority at FERC determined that the New York ISO proposal did not provide sufficient justification for prioritizing public policy resources, such as renewable resources called for in the state law, before non-public policy resources independent of cost.

Commissioner Richard Glick dissented on that order (ER20-1718) and had some scathing remarks that the ruling is hostile toward state policies and a striking break from precedent, practice and common sense. Going beyond a similar step it took on PJM Interconnection, Glick said the New York ISO order “stakes out the even more radical position that it is improper for an RTO to design its tariff to acknowledge, much less accommodate, state public policies.”

During the ACORE discussion with Wetstone, Chatterjee said “it really does frustrate me when people look at our actions to preserve markets as being hostile to any particular fuel source.” Fostering competition in wholesale markets is an important part of ensuring prices are just and reasonable, and one way FERC pursues that is to ensure market rules are resource neutral for those that are technically capable of participation, he said.

For that to happen, however, renewable resources have to be able to take advantage of their cost effectiveness, and that is where “there’s a little bit of a rub” with FERC orders, Wetstone countered.

Chatterjee said renewable resources should be able to compete on their own footing without subsidies, and Wetstone responded that there is a question of how FERC defines a subsidy. Other fuels receive government support too, Wetstone said.

“We can agree to disagree,” Chatterjee said, stating he is confident that “our actions will not hurt renewables” when examined to include storage and other rulings on competitive markets.

Chatterjee said one of his top priorities has been ensuring grid investments keep pace with the rapid rise in clean energy resources that companies and households are demanding. His two-fold goal has been to have competitive markets provide a level playing field while seeing that the transmission grid is up to the task of meeting the changing resource mix. In a move that should be welcome by ACORE and renewable advocates, FERC has updated it methodology for return on equity for transmission investments, Chatterjee said.

The upcoming DER proposal is another step that could help integration of renewables, along with transmission development to enable offshore wind resources, Chatterjee added. FERC realizes that some of its existing policies may not address some of the unique issues around offshore wind and the challenges with generator interconnection issues, and a technical conference in October will provide a chance to hear about market barriers for offshore wind facilities, he said.

A similar technical conference was held on hybrid resources, such as those partnering renewable resources with storage assets, Chatterjee noted during the ACORE meeting. There are thousands of megawatts of new resources entering the wholesale market and he is looking forward to reading comments on the technical conference and considering steps to take to address market issues, he said.

Co-locating renewables and storage resources will benefit consumers and change the way the power grid is operated, which is among the issues facing California as the state experiences strained resources and grid emergencies, Chatterjee said. He did not speculate on what steps California should take, and took a broad view that hybrid resources can provide reliable supplies when needed most, when wind and solar power output declines.

With FERC breaking down barriers for new resources to participate in wholesale markets, “I’m optimistic on what the future will hold” for clean energy resources, he said.

By Tom Tiernan ttiernan@fosterreport.com

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