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Former Chairman Bay reflects on tough, adaptable FERC

Norman Bay will leave FERC on Feb. 3 with no regrets, proud of his work starting as the director of the Office of Enforcement through his time as chairman of the commission.

"Probably every chairman has a few things on her or his wish list, but in my case, I truly have no regrets," Bay said in an exclusive interview with S&P Global Market Intelligence on Feb. 1.

"I have given it my best shot," Bay said. "I've been working six days a week for the last few years, trying to further FERC's critical mission of providing efficient, reliable and sustainable energy to consumers, and I feel like I've done as much as I can do. That's really all you can ever ask of yourself."

Bay and Commissioner Cheryl LaFleur found out on Jan. 25 that President Donald trump had picked her to become acting chairman, replacing him. Bay had alerted the Trump transition team that he would leave if he was removed from the chair, a common course of action for FERC chairmen after a change of presidential administrations.

During the interview, Bay reflected on his time at the commission, first as director of the Office of Enforcement starting in 2009, then as commissioner beginning in August 2014, and finally as chairman beginning in April 2015. During those years, FERC has addressed massive changes in the energy industry, he said, allowing "consumers to benefit from change while helping industry and the markets to the change, maintaining just and reasonable rates as well as reliability."

Among the FERC efforts, Bay described a broad campaign to increase the reliability of the electric grid and improve coordination between the electric power generation industry and the natural gas transportation industry during a "historic shift" to lean on gas as a generation fuel. Bay also pointed to rulemakings on power price formation. "Those measures in aggregate help improve the efficiency and transparency of the markets so that better investment signals are being sent."

On FERC's efforts to encourage innovation and remove barriers to energy storage, Bay also felt like the commission made steady progress. FERC issued a notice of proposed rulemaking in November 2016 and issued a policy statement on energy storage. "We have to get the market rules right with respect to energy storage," he said. "It really is a unique resource, in that it can provide so many kinds of services. It can be load. It can be generation. It can provide transmission and distribution support. So you have to make sure the market rules are right so that the technology [and] the innovation either succeeds or fails on its own merits."

Given his first role in enforcement, Bay was pleased the commission had acted as a "cop on the beat," using its anti-manipulation authority under the Energy Policy Act of 2005 to protect energy consumers and markets. He also pointed to efforts on cybersecurity as another way the commission is protecting the market, though he acknowledged that more work needed to be done. Under the chairman, FERC adopted critical infrastructure protection standards, issued a rulemaking on supply chain risk management, provided architectural reviews on control systems in the gas and electric industries, and promoted information sharing with states and industry.

As for the FERC workforce, Bay highlighted a federal employee survey where FERC ranked as the fourth-best place to work among midsize agencies, with high scores on employee engagement, job satisfaction and effective leadership. "And that is important to me, because at the end of the day, the most important asset we have here at FERC is our staff," Bay said. "It's our human capital."

"FERC is a place for workhorses," Bay said with a smile, "not show horses."

Looking forward, Bay saw FERC's workload continuing to mount. Groups opposing natural gas infrastructure have been active at FERC and are not expected to relax under the Trump administration. "I would expect the protests to continue," Bay said. "Certainly over the 21 months that I was the chairman, we all saw the protests at our open meetings and in other venues. So there does not seem to have been any diminution."

Bay recognized that there are people unhappy with the development and use of fossil fuels, which is where many of the protests are grounded. He observed that the protests often target activities, such as the production of natural gas, that are not under FERC authority, however.

"I've always encouraged them to participate in our processes using the many vehicles we have in place to allow them to share their views with the commission," he said. "I respect their views. I respect their First Amendment rights. What is difficult, however, is when they try to disrupt our meetings or take other action that is disruptive of the operations of the commission."