As U.S. states work to support preferred power resources, Federal Energy Regulatory Commission Chairman Neil Chatterjee said he is kicking around the idea of forming a task force with states to consider their fuel security and grid resilience concerns.
The task force, which Chatterjee said FERC could carry out in conjunction with the National Association of Regulatory Utility Commissioners, or NARUC, would inform the commission's ongoing review of electric grid resilience and give FERC more insight on states' specific energy challenges, including efforts to prop up financially struggling nuclear plants. Chatterjee cautioned, however, that he would need to consult with his fellow FERC commissioners and staff to see if they agree with the idea.
"I think we've got to engage the states and so some of the things that I've been kicking around is a joint FERC-NARUC task force to kind of get the perspective of the states on some of the unique challenges that they're facing because a lot of states are taking actions regarding their generation mix," Chatterjee said on the sidelines of a June 12 hearing before a U.S. House of Representatives subcommittee.
FERC launched a broad review of national grid resilience in January 2018 after rejecting a proposal from the U.S. Department of Energy to ensure full cost recovery for power plants in wholesale markets that stored at least 90 days of fuel on-site, a rule that would have mainly benefited nuclear and some coal-fired facilities. The commission has yet to decide what, if any, new policies it could propose as a result of the resilience review, but Chatterjee recently said he wanted to engage more with regional grid operators and states on the topic.
"I've been reviewing the record trying to see what is the logical next step, and I think it's clear that getting a sense from the [regional transmission organizations] and the [independent system operators] on what challenges they're seeing on fuel security, or what they are seeing and aren't seeing, is a logical outgrowth of this as further building out the record," Chatterjee told S&P Global Market Intelligence.
But Chatterjee reassured lawmakers during the June 12 hearing that FERC is "not going to put our thumb on the scale" in favor of certain resources as part of its resilience docket.
Although FERC found that the DOE did not show the need for its grid resilience rule, many states have taken steps to support certain energy resources, including nuclear plants, to achieve their climate and energy goals. State efforts to subsidize preferred energy resources have proved challenging for FERC, which is working to balance states' individual objectives with the agency's mandate to ensure just and reasonable wholesale power rates and promote competition.
The commission has yet to sign off on the PJM Interconnection's proposed overhaul of its capacity markets to accommodate state-subsidized energy resources even though PJM's next capacity auction is set to take place in August. During the June 12 hearing, lawmakers on the House Energy and Commerce Committee's Subcommittee on Energy pressed FERC members for an update on the matter, citing the uncertainty facing PJM market participants.
"Either a rule is going to be published right before August, which won't give auction participants enough time to adjust, or a decision will not be published and participants will have to take part in an auction under rules that FERC has found to be unjust and unreasonable," U.S. Rep. Mike Doyle, D-Pa., said. "That raises lots of concerns and uncertainty."
Chatterjee responded that he needed to be careful discussing a pending matter but that FERC is working "as diligently as we can" on the proceeding.
"This is a vexing challenge because you have a situation where two things that I think we all believe in — states' rights and the markets — are colliding," he said. "Trying to figure out how to sort through that while assuring just and reasonable rates has proven to be very very challenging."
Democratic Commissioner Cheryl LaFleur said she was "deeply troubled" by the delay. Although FERC has some tools at its disposal to reduce the uncertainty, "we have to agree on them and use them," she said.
Timing cloudy for final DER rule
Lawmakers also questioned FERC members on the status of a final rule to facilitate distributed energy resource, or DER, aggregation in wholesale markets. The commission originally planned to issue a final rule on the matter alongside a regulation to encourage fuller participation of energy storage in competitive markets. But in February 2018, the commission finalized a stand-alone rule on energy storage without corresponding action on DER aggregation.
Rep. Paul Tonko, D-N.Y., asked when FERC may finalize a DER aggregation rule, saying he hoped the agency could "complete that as soon as possible."
Chatterjee said the commission had a sufficient record to finish its work but that "we have some complex legal questions that we are wrestling with" and could not make predictions on timing.
Lawmakers call for more transparency
House members also brought up concerns with RTO/ISO stakeholder engagement and FERC's role in ensuring transparency. Subcommittee Chairman Bobby Rush, D-Ill., said he worried that "consumer voices are often overlooked" and asked what steps the commission could take on the issue.
LaFleur said the agency could rework parts of Order 719, which directed grid operators to increase their responsiveness to customers and balance the diverse interests of their stakeholders.
Democratic Commissioner Richard Glick suggested funding for an office of public participation at FERC, noting that the U.S. Congress passed legislation in the 1980s to create such an office but has not provided money for the initiative. In May, a group of U.S. Senate Democrats introduced legislation to create an Office of Public Participation and Consumer Advocacy at FERC. During the House hearing, Rep. Ann Kuster, D-N.H., said she was also cosponsoring legislation set to come out June 12 aimed at improving public participation at FERC.
No news on 5th commissioner
The White House has yet to nominate a fifth commissioner to FERC following former chairman Kevin McIntyre's death in January, leaving the agency split between two Republican and two Democratic members. Although Chatterjee said FERC is "always strongest when having a full complement of five commissioners," he pointed to recent bipartisan agreements on LNG export facility approvals and a final rule on energy storage as proof that FERC is still making good progress.
"We're continuing to get our work done despite the fact that we're in a 2-2 environment," he said.
In addition to the vacancy left by McIntyre, FERC will soon have another empty seat. LaFleur is not pursuing another term at the agency after her current one expires June 30, and the Trump administration has yet to nominate her successor. But LaFleur could stay on at FERC until the current session of Congress ends in late 2019 if her replacement is not confirmed before then. She recently confirmed plans to remain at the commission for some time past June.