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Washington Week: Powelson exit from FERC could spark fight over successor


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Washington Week: Powelson exit from FERC could spark fight over successor

The U.S. power industry will be closely watching whom the Trump administration nominates to replace Federal Energy Regulatory Commission member Robert Powelson, who left the agency Aug. 10 to become head of a private water industry group.

Powelson's exit could set up a fight over his successor as the Trump administration presses for policies to preserve coal-fired and nuclear generation that critics say are unnecessary and will distort competitive power markets.

Politico reported the White House plans to nominate U.S. Department of Energy official Bernard McNamee to fill the empty spot on the commission. McNamee, currently the executive director of the DOE's office of policy, was the department's deputy general counsel when Energy Secretary Rick Perry launched an unsuccessful proposal aimed at ensuring full cost recovery for certain coal-fired and nuclear power plants in wholesale markets to bolster grid resilience.

McNamee's presence at the DOE at that time, as well as his past defense of fossil fuel use generally, have environmental groups on edge and could cause Democrats in the U.S. Senate to fight his nomination if President Donald Trump ultimately chooses him to replace Powelson.

For his part, Powelson was a vocal defender of the competitive wholesale markets FERC regulates and expressed concern with how the DOE's proposal could have affected the functioning of those markets. In January, Powelson joined FERC's four other commissioners in rejecting the Energy Department's request, but the commission is still evaluating possible new policies to ensure grid resilience.

Possible confirmation fight ahead

FERC is an independent agency and therefore the Trump administration cannot direct the agency to take certain actions, as shown by the agency's rejection of the DOE proposal.

However, if McNamee is nominated and confirmed he could be a more pronounced advocate for federal action to prop up coal and nuclear plants. Moreover, concerns of FERC's possible politicization have reemerged recently, in part because FERC Chairman Kevin McIntyre's chief of staff said at a nuclear industry gathering that the commission is working with the DOE and the National Security Council to develop a list of plants the administration deems critical for national security and grid resilience.

That list will likely influence future efforts by the Trump administration to save plants it deems crucial to national security, including coal and nuclear units facing economic pressures that could force them to close.

In a draft plan leaked in late May, the DOE proposed requiring grid operators to buy power or capacity for two years from certain "fuel secure" plants, which could include coal-fired and nuclear generating facilities. The directive would be a stop-gap measure while the administration forms a list of defense-critical power plants that could receive federally mandated financial support. The plan, however, was just a draft and the agency has yet to release a final proposal.

Coal, LNG shippers weigh tariff impacts

The escalating trade fight between the U.S. and China continues to pull in energy producers.

On Aug. 8, China announced 25% tariffs on $16 billion worth of U.S. exports, including coal and certain oil products. In addition, China has threatened to impose 25% tariffs on U.S. LNG and other products as the Trump administration considers proposed tariffs on $200 billion of imports from China.

Although China is a small market for U.S. coal exports, the country takes a decent-sized and growing portion of U.S. LNG shipments abroad. Trump's efforts to shrink the U.S. trade deficit have also affected domestic markets for wind and solar energy, with companies in the space facing financial difficulties from import duties on solar cells and panels, steel and aluminum.

Perry to tour North Dakota mine, power plant

Perry will travel to North Dakota on Aug. 13 to tour NACCO Industries Inc.'s Falkirk lignite mine and a nearby power plant the mine serves, Great River Energy's Coal Creek generating station.

Joining Perry on the tour will be North Dakota Gov. Doug Burgum, U.S. Sen. John Hoeven, and U.S. Rep. Kevin Cramer, who represents North Dakota's at-large district in the U.S. House of Representatives. Cramer is also the Republican challenger to incumbent Democratic U.S. Sen. Heidi Heitkamp in the 2018 midterm race.

Senate back in action

The U.S. Senate will be back in action after a one-week summer recess. Although no major energy-related legislation is scheduled for a vote in the coming days, lawmakers will hold two hearings that will touch on the energy sector.

The Senate Committee on Energy and Natural Resources on Aug. 16 will consider the nominations of William Cooper to be the DOE's general counsel and Lane Genatowski as director of the Advanced Research Projects Agency-Energy, known as ARPA-E. Trump has twice called to suspend funding for ARPA-E as part of the White House's annual budget proposals to Congress, but the Senate has consistently pushed back against the administration's requests.

Trump's resistance to the research program will likely come up at the hearing.

Also on Aug. 16, the Senate Committee on Environment and Public Works will examine a GOP-backed bill that would limit the scope of state reviews for Clean Water Act permits for natural gas pipelines and other energy infrastructure projects. The legislation, entitled the Water Quality Certification Improvement Act of 2018, is a response to state-led opposition to new pipelines that has stymied projects in places such as New York.

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US Congress

Aug. 16

The U.S. Senate Committee on Energy and Natural Resources will consider the nominations of William Cooper to be general counsel at the U.S. Department of Energy and Lane Genatowski to be director of the Advanced Research Projects Agency-Energy.

Aug. 16

The Senate Environment and Public Works Committee will hold a hearing to examine the implementation of Clean Water Act Section 401 and Senate Bill 3303, the Water Quality Certification Improvement Act of 2018.

Federal agencies

Aug. 13

Energy Secretary Rick Perry will travel to North Dakota to tour North American Coal Corp.'s Falkirk lignite mine and Great River Energy's Coal Creek generating station.

Other notable stories from last week

PJM, FERC staff field questions on capacity market revisions

FERC's divide on need for Spire STL pipeline may signal future battles

As federal climate action stalls, Md. governor charts own course

FERC stops all construction on $3.7B Mountain Valley gas pipeline

US coal considers best ways to capitalize on 'new lease on life' under Trump