The Nickel Report

On August 10, the Federal Energy Regulatory Commission (FERC) officially regained its quorum when Robert Powelson was formally sworn in as a commissioner. Mr. Powelson joins  fellow Republican Neil Chatterjee and Democrat Cheryl LaFleur at the agency. It was also announced that Mr. Chatterjee would be FERC’s new chairman pending the expected Senate confirmation of Republican nominee Kevin McIntyre as chairman in the fall.

At full strength, FERC has five members, but three are the minimum legally required to conduct much agency business. FERC lost its quorum in early February when former Chairman Norman Bay resigned after Commissioner Cheryl LaFleur was elevated to chairman. In addition, former Commissioner Colette Honorable stepped down at the end of June, leaving LaFleur as the sole Commissioner. For the last six months, FERC staff has handled various routine matters under delegated authority, but FERC has been unable to act in contested proceedings.

As a result, the reconstituted FERC faces an unprecedented backlog of pending cases. including  utility mergers, pipeline certificate applications and formal complaints alleging various market problems. FERC will also be called upon to address a number of policy issues that were high profile and controversial even before its loss of quorum.

Foremost among them are questions concerning the impact of state policies, particularly generation subsidies, on FERC-jurisdictional wholesale markets. FERC held a lengthy technical conference in May to obtain stakeholder input and build a record on these questions, which should facilitate action by the new FERC. Several states have either adopted or considered measures to ensure baseload power remains in the market, particularly nuclear facilities. Various stakeholders have expressed concern about loss of coal and nuclear baseload facilities because of their value in ensuring electric reliability. Chatterjee said in a recent podcast posted to FERC’s website (August 14, 2017):

I'm also committed to the resilience and reliability of our electric system. These are essential to national security. And to that end, I believe baseload power should be recognized as an essential part of the fuel mix. I believe that generation, including our existing coal and nuclear fleet, need to be properly compensated to recognize the value they provide to the system.

Other major holdover items include potential transmission planning reforms, possible changes to market manipulation and enforcement rules, technical “price formation” issues, cybersecurity, the treatment of “Qualifying Facilities,” and changes to interconnection rules.

In addition, the reconstituted FERC seems likely to pursue new initiatives that reflect the energy policy priorities of the Trump administration. These include promoting and expediting new infrastructure construction, reducing regulation and, potentially, implementing any recommendations made by the US Department of Energy’s much-anticipated electric reliability study.

It remains to be seen what approach FERC will take to any of these issues. Although Mr. Chatterjee, Mr. Powelson, Mr. McIntyre and Democratic nominee Richard Glick all have considerable experience working on FERC issues, none have given extensive clues as to how they would decide specific issues as commissioners.

In the immediate term, it seems most likely that FERC will focus on addressing more routine issues and reducing its backlog. FERC’s agenda is traditionally set by its chairman. Given that Mr. McIntyre is expected to become the permanent chairman soon, it would be understandable if Mr. Chatterjee did not seek to make major policy decisions in the interim. Mr. Chatterjee has announced that FERC will resume its normal monthly open meeting schedule on September 20.

In the meantime, Mr. Chatterjee has stated that FERC will be issuing “notational” orders on pending matters. Commissioner LaFleur has indicated that she worked closely with FERC staff during it quorum-less period to help to “triage” proceedings based on their relative importance and how long they had been pending. Thus, it seems likely that the new FERC will be very busy for the rest of the summer, but that major action on high-profile policy issues will wait until at least the fall.