latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/ferc-s-chatterjee-prepares-to-leave-agency-as-the-green-new-neil-66110015 content esgSubNav
In This List

FERC's Chatterjee prepares to leave agency as 'the Green New Neil'

Blog

Global M&A By the Numbers: Q3 2021

Blog

Insight Weekly: Global stock performance; hydrogen pilot projects; Powell's Fed future unsure

Blog

Insight Weekly Labor market recovery hurdles power market integration nonbank MA hunt

Blog

Q&A: Q2'21 Power Forecast: Overheated Power Markets are Here – Who Wins, Who Loses, and Why?


FERC's Chatterjee prepares to leave agency as 'the Green New Neil'

SNL Image

Then-Federal Energy Regulatory Commission Chairman Neil Chatterjee speaks during the 2019 Concordia Annual Summit in New York City on Sept. 23, 2019.
Source: Riccardo Savi /Getty Editorial via Getty Images

Neil Chatterjee began his tenure as a member and former chairman of the Federal Energy Regulatory Commission by backing a Trump administration plan to save ailing coal plants.

But his five-year journey at FERC culminated in a final meeting in July where current Democratic Chairman Richard Glick noted Chatterjee will be leaving the commission with a new moniker: "the Green New Neil."

Chatterjee chaired FERC when it issued major orders opening wholesale power markets to energy storage and distributed energy resources. He also proved to be a key vote in compromises on natural gas infrastructure that prevented projects from stalling amid years of division over how to consider climate change in permitting decisions.

But Chatterjee also faced heavy criticism during his tenure over his approach to the impact of states' clean energy policies in wholesale power markets. And the issue of how to assess climate impacts associated with gas projects remains far from settled as the agency's approach continues to evolve.

"Did I get everything right? No," Chatterjee told S&P Global Market Intelligence in a wide-ranging interview ahead of his departure. "But I think, hopefully, that history will judge that I at least tried to do what I thought was best in the public interest."

Chatterjee's last day at the agency is Aug. 30. His exit will leave the five-member commission with two Democrats and two Republicans headed into the fall as pressure builds for the White House to announce a replacement nominee.

Early turmoil, tragedy

Chatterjee, a former aide to Republican Minority Leader Mitch McConnell, R-Ky., joined FERC in August 2017 as the agency faced a huge administrative backlog following a six-month period where it lacked a three-member voting quorum.

As the agency was working through that backlog, the U.S. Department of Energy in September 2017 sent FERC a notice of proposed rulemaking that sought to deliver out-of-market subsidies to at-risk coal- and nuclear-fired generators. Critics blasted the proposal as a coal bailout.

Chatterjee was briefly thrust into the chairman's seat the next month when Kevin McIntyre, FERC's chair at the time, stepped aside due to health issues following a brain tumor diagnosis.

In January 2018, Chatterjee joined McIntyre and three other commissioners in unanimously rejecting the DOE proposal. But Chatterjee, a Kentucky native, also expressed regret for his coal-friendly rhetoric in the run-up to the commission's vote.

"I was making the transition from partisan legislative aide to independent regulator and when you approach things from a political standpoint, even in areas where you are going to lose on something or not move something forward, you put up a fight to demonstrate to your constituency that you tried," Chatterjee said. "That works in the legislative and political arena. That is not appropriate in a regulatory body, and it just took me some time to grow into the job and make that transition."

Chatterjee was given the chairman's gavel again in October 2018 as McIntyre continued his fight with cancer, before dying on Jan. 2, 2019.

"My biggest regret is that I didn't get to serve four years with Chairman McIntyre," Chatterjee said.

Mixed power-sector record

Under Chatterjee's leadership, FERC reaffirmed a landmark energy storage rule and later issued a similar rule requiring regional grid operators to clear market barriers to aggregations of distributed energy resources like small-scale solar arrays.

With Chatterjee in charge, the commission also overhauled the Public Utility Regulatory Policies Act of 1978 and issued a first-of-its-kind policy statement encouraging carbon pricing in wholesale markets.

In the wake of those actions, Chatterjee was abruptly demoted by former President Donald Trump just days after the Nov. 3, 2020, presidential election.

Chatterjee said that while he is proud of his work on power-sector issues, he would have liked to do more to encourage the build-out of electric transmission infrastructure in response to a surge in renewable energy development. FERC staff considered pursuing a complete overhaul of Order 1000, FERC's last major transmission planning rule, but ultimately decided against it due to time and resource constraints, Chatterjee said.

But he also commended FERC Chairman Richard Glick for launching a major new rulemaking effort aimed at speeding nationwide grid build-out with the help of a new federal-state transmission task force.

"I do have some regrets that we didn't do the more wholesale undertaking," Chatterjee said. "That said, I think this process that Chairman Glick has kicked off is likely to take two-plus years to complete and I just didn't have that."

Chatterjee also presided over a highly contentious final rule in December 2019 that directed the PJM Interconnection to expand its minimum offer price rule, or MOPR, to address alleged price suppression caused by state-level clean energy subsidies.

Environmental groups claimed at the time that the order would freeze clean energy resources out of the grid operator's multi-billion-dollar capacity market while costing consumers. But PJM's latest auction, held under the expanded MOPR, produced the lowest clearing prices in nearly a decade, forcing a fresh wave of coal retirements.

"I bemoan the fact that there was so much consternation and controversy about it and speculation that it would cost consumers all this money and that it would bail out ailing coal plants while hurting renewables," Chatterjee said. "None of that happened, so from that sense, I do feel vindicated."

PJM is now facing fierce pushback to a proposed MOPR replacement.

"As somebody who lived this for several years, it is very easy to poke at and criticize efforts to try to resolve some of the challenges within these markets," Chatterjee said. "It is way harder to come up with a solution that works."

Compromises on gas projects

Chatterjee said he considers the commission's approval of a dozen or so LNG export projects as one of his top achievements.

By Feb. 21, 2019, FERC had not approved an LNG export project in about two years as a crowded field of project developers raced to advance their facilities to construction. But Chatterjee would reach an agreement with former Democratic Commissioner Cheryl LaFleur and former Republican Commissioner Bernard McNamee that would break the impasse.

The order — which approved Venture Global LNG's Calcasieu Pass LNG terminal in Louisiana — included an estimate of direct greenhouse gas emissions associated with and it compared the emissions to a national net emissions inventory.

That framework proved enough to see a flurry of other permits for LNG projects make it through the commission.

"I remain a believer in the view that U.S. LNG displacing more carbon-intensive sources of fuel globally is positive for the planet," Chatterjee said.

The more recent breakthrough came a few months after Glick's appointment to the chairmanship in January. Chatterjee joined Glick and Democratic Commissioner Allison Clements in approving a March 22 order authorizing a small pipeline project by Northern Natural Gas Co. that marked FERC's first-ever pipeline authorization that assessed climate change impacts associated with a gas project.

"Even though we had a configuration with three Republicans and two Democrats and three supporters of moving forward with our existing approach to evaluating pipelines, the reality is the chairman didn't have to schedule any of those votes," Chatterjee said. "And so I made a very pragmatic decision in order to move forward with some key projects."

The order did not establish a methodology for determining the significance of project emissions, which were negligible in the Northern Natural case. Glick would tell reporters that FERC had used an "eyeball test."

Chatterjee said the order still sent a signal to the market that similar projects involving maintenance, replacements or upgrades could still get through the commission.

But the compromise left it far from clear about how the commission could go about denying a larger pipeline project on climate change grounds or the types of mitigation measures it could require.

An answer may emerge from a review of FERC's 1999 natural gas pipeline certificate policy that the commission resurrected in February, which is expected to address how the commission considers climate change impacts.

In the meantime, FERC has been issuing a series of supplemental environmental reviews for gas projects, and agency staff has repeatedly found in draft reviews released so far that they are "unable to determine significance" when it comes to climate change.

Chatterjee said he is uncertain about how the pipeline policy revision will shake out.

"I really think it is going to boil down to who my successor is," Chatterjee said.