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Some grid security interventions 'commercially motivated,' FERC's LaFleur says


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Some grid security interventions 'commercially motivated,' FERC's LaFleur says

Federal Energy Regulatory Commission member Cheryl LaFleur questioned proposals to compensate generating resources, such as coal-fired plants, that struggle to compete with natural gas in wholesale power markets.

The Democratic commissioner said cheap and plentiful gas supplies, and the ability to quickly build gas-fired generation, has helped make gas the generating fuel of choice in some parts of the country. That has led some coal and nuclear generators to seek market rules to compensate them under the rubric of grid resilience, LaFleur said on Oct. 15 at the North American Gas Forum sponsored by Energy Dialogues.

Some concerns may be "sensible," such as worries about multiple power plants relying on one gas pipeline, LaFleur said.

But she called other concerns "more commercially motivated, like criticizing ... cyber security and natural security of natural gas pipelines." She said these arguments were suspect because they came from parties that offer an answer of "'let's pay some other resource that we like more,'" rather than making pipelines more secure, she said.

Grid resilience

FERC early this year voted unanimously to reject a proposal from the U.S. Department of Energy to compensate generating resources that have 90 days of fuel stored onsite. A leaked DOE memo in May presented a national security rationale for requiring grid operators to compensate struggling generators. Months later, a full-fledged proposal has yet to surface from the White House.

"In the meantime, we have to try to apply the rules as squarely as we can," and make sure that if there is a problem, the solution is tailored to it, LaFleur said.

With FERC down to four members, LaFleur is a key swing vote, particularly on decisions on whether or not to approve permits for natural gas infrastructure, which have become more divisive. She continued to walk a careful line at the conference. She recounted the reasons behind her dissents on gas projects while stating that FERC commissioners should seek common ground. Whether a 2-2 split vote at the commission holds up other projects may depend on how long FERC is without a fifth commissioner, she told reporters.

Cautionary tales

As the administration seeks to speed LNG permitting, LaFleur offered the industry attendees notes of caution. FERC has to be sure it does not compromise its responsibility under the Natural Gas Act or the National Environmental Policy Act to carefully review applications, and it must not shortchange the stakeholder process, she said. She pointed out that FERC approvals of gas projects are often followed by lawsuits, in which those opposed to the infrastructure are "making sure there are no holes in anything being done."

This year, in response to petitions filed by environmental groups, the U.S. Appeals Court for the District of Columbia Circuit overturned one FERC certificate over greenhouse gas considerations, and the U.S. Appeals Court for the 4th Circuit vacated several federal resource agency permits for the Dominion Energy Inc.-led Atlantic Coast Pipeline LLC and EQT Corp.-led Mountain Valley Pipeline LLC projects.

"It is incumbent upon us to make sure our processes are as strong and robust" as possible, LaFleur said.

LaFleur also warned pipeline operators about environmental and safety compliance, noting that high-profile incidents can immediately affect the whole industry and quickly surface in FERC dockets for other projects.

It is important that conditions attached to FERC certificate orders are "scrupulously observed," she said, or a pipeline project may be slowed or referred to enforcement. FERC last year suspended work on horizontal directional drilling for the Rover Pipeline LLC project after a major release of drilling fluids into Ohio wetlands. The agency also held up in-service authorization for Rover laterals for several months while commission staff waited for progress on restoration and stabilization in areas that had suffered slope failures.

Maya Weber is a reporter for S&P Global Platts, which like S&P Global Market Intelligence, is owned by S&P Global Inc.