Week Ending February 19, 2021

New Look at NOI on Pipeline Policy, Winter Storm Effects Addressed by FERC

This Article Appears as Published in Foster Report No 3337

The February 18 FERC meeting highlighted how much Chairman Richard Glick intends to tackle as the Commission launched some new initiatives, addressed the winter storm ravaging much of the central U.S. and returned to a Notice of Inquiry (NOI) on the policy statement for natural gas pipeline certificate reviews.

The ambitious agenda Glick laid out has a lot on it, but he is confident that with the full complement of five commissioners and dedicated staff, the Commission can tackle them, Glick said during a press conference after the meeting. With so many items on the to-do list, FERC may have to prioritize of few of them to make progress at some point, but “we can walk and chew gum at the same time,” he joked.

The agenda includes supplementing the record on the 2018 NOI (PL18-1) on gas pipelines, a series of technical conference on organized wholesale power markets and state concerns, a new Office of Public Participation mandated by Congress, transmission planning and investment incentives, a new senior staff position to address environmental justice issues, and the joint inquiry with the North American Electric Reliability Corp. on the winter storm and grid reliability issues.

Glick and the other four commissioners spoke about the events in Texas, Southwest Power Pool, Midcontinent Independent System Operator and the use of rolling blackouts that has extended for several days. The events have created plenty of criticism of the Electric Reliability Council of Texas (ERCOT), with commissioners noting a lack of following past recommendations from NERC and FERC following similar extreme cold weather in the South, political debate on generation resources and the lack of FERC jurisdiction over the ERCOT market.

Glick noted that FERC does have jurisdiction over the bulk power system reliability and NERC standards that are applicable in Texas, and he raised the issue that ERCOT’s “go it alone approach” has been harming it by limiting grid connections with other parts of the country.

Former Texas Governor Rick Perry, who served as Secretary of Energy under former President Donald Trump, commented that Texans are willing to endure a limited number of blackouts to keep FERC jurisdiction over the ERCOT market at bay. But that view struck Glick as the proverbial cutting off your nose to spite your face, he said.

Glick said he is prepared to implement mandatory reliability standards so that power generation units are better prepared for the next extreme weather event, and “there will be a next time,” as such events that include winter storms, hurricanes and wildfires are becoming more frequent.

ERCOT advocates have often touted the energy-only market compared with the capacity markets of other independent system operators. Glick pointed out that a capacity market would not have made a difference because ERCOT has plenty of generation capacity. Among the issues in the crisis is that so much generation was out of service, and the limited transmission connections with other markets hindered ERCOT and MISO South from importing power when generation went offline.

Other commissioners addressed the crisis, expressing empathy for those enduring outages and vows to investigate the cause of events in coordination with NERC and others.

Commissioner Neil Chatterjee dubbed the events “a true humanitarian crisis” and he understands the tendency to want someone to blame. However, “we all need to take a deep breath and allow the experts to dig in and find out what was at the root cause of these clear failings.” He commended Glick for his leadership and encouraged parties “to stop viewing these sorts of things through a particular partisan lens, favoring one fuel source or another.”

The gas pipeline policy statement NOI sat dormant under previous FERC leadership because Chatterjee believed a full complement of five commissioners is needed to address a policy statement, and the Commission only recently regained that full roster. During the press conference, Glick noted that FERC has issued plenty of orders on items with less than five commissioners that are more controversial than the NOI.

In the revised proceeding, FERC staff noted that there have been a host of changes since the NOI was issued in early 2018, with statutory changes, the issuance of executive orders, court rulings and increased stakeholder interest in certain topics. FERC received more than 3,000 comments in 2018 and is taking the opportunity to refresh the record and ask for input on new questions, including several dealing with environmental justice and the effects of pipeline infrastructure on low-income communities, minority communities and possible solutions to mitigate any harmful effects, FERC staff noted in a presentation during the meeting.

Chatterjee said he is looking forward to the new review and whether it could lead to a model for building out infrastructure needed to meet energy needs, including power transmission investments. He cautioned that he does not want to see the proceeding become a vehicle to bog down the process for infrastructure investment by burying it in red tape.

Because his term as a commissioner ends June 30, Chatterjee said FERC may not reach a conclusion before he is replaced by a nominee from President Joe Biden. Anyone nominated to fill his seat will certainly face questions from senators during the confirmation process on if they support the 1999 policy statement or want to see a “radical departure” from that, Chatterjee said.

Commissioner James Danly does not believe there is a need to revisit FERC’s gas pipeline certificate policy. He indicated he is likely to oppose most of the initiatives if changes are sought, while commending Glick for going to “extraordinary lengths” to accommodate his input on the item, knowing full well his outlook on pipeline certificate matters in general.

As she did at a past meeting, Commissioner Alison Clements stated her views that FERC’s 1999 policy statement is long overdue for an update. She supports the NOI and encouraged stakeholders to provide practical recommendations for assuring FERC certificate orders are based on a complete analysis of the need for proposed facilities, environmental justice concerns and approaches on greenhouse gas emissions.

The NOI seeks comment on how FERC determines the need for new pipelines, the use of eminent domain, landowner interests, environmental impacts and other elements. Comments are due 60 days after publication in the Federal Register.

Glick said he has no timetable for the policy statement proceeding, vowing to review comments and make decisions among commissioners on possible next steps.

At the outset of the meeting, Glick said he is looking forward to working with colleagues and staff on the important issues FERC is tackling. He said he will strive to reach consensus as often as possible as the energy industry works toward a cleaner energy future. While FERC’s job is not to force stakeholders to reduce emissions, which is better left to Congress, states and other agencies, Glick believes FERC needs to take the existential threat of climate change into account when assessing public interest.

Glick announced a series of technical conferences (AD21-10) focused on modernizing wholesale market design, with the initial session on capacity market constructs and a durable resource adequacy element in PJM Interconnection.

Subsequent sessions will be held involving New York Independent System Operator and ISO New England in the months ahead, with additional conferences to examine how energy and ancillary services markets may need to evolve to meet the challenges posed by the power grid of the future. Glick said the proceedings will be designed to accommodate states exercising their authority in the power sector.

In a notice, FERC said the first commissioner-led technical conference will be held March 23 in an online format lasting all day, with a second half-day session on March 24. A subsequent notice will be issued to provide the agenda for the technical conference.

Commissioner Mark Christie praised Glick for kicking off the proceedings and noted that each ISO is different and has its own challenges. The ISOs have to be willing to face and address “inconvenient truths” and inform FERC on what is feasible from an engineering standpoint, Christie said.

Grid operators in California, ERCOT, SPP and elsewhere are facing a lot of pressure from politicians in their states and special interest groups who want different things from the ISOs, Christie continued. ERCOT’s energy-only market is not subject to FERC’s jurisdiction and as a former state regulator, Christie said he not not want to overstep FERC’s jurisdictional reach.

In the in the inquiry on the winter storm and its effects on bulk power system reliability, Christies said he wants to avoid drawing conclusions too soon.

Following through on a mandate from Congress to establish an Office of Public Participation, Glick said he asked Clements to take the lead on getting that office up and running. She has been a strong proponent of creating that office, which was called for by Congress in 1978 but never received funding or appropriations, Glick pointed out.

Clements thanked Glick for the role and said she intends to reach out to environmental justice communities and other factions that have traditaionally been underrepresented in FERC proceedings. Energy bills are some of the larger expenses paid by many families and Clements believes there will be much to learn about real-world consequences of FERC regulations. A more inclusive decision-making process will lead to more credible and durable agency orders, she said.

Clements announced a workshop on the effort set for April 16, and she intends to seek speakers and panelists to participate in the coming days.

Touching on the senior staff position focusing on environmental justice issues, Glick said he will provide more information later as some of the personnel issues are worked out. He made the announcment of that position during a February 11 press conference.

By Tom Tiernan ttiernan@fosterreport.com

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