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Former FERC, DOE officials mull Texas, climate, transmission policy quandaries

Highlights

Hill sees path for FERC to aid state climate leadership

LaFleur skeptical FERC can revive backstop siting authority

A new Center on Global Energy Policy-hosted "Straight Talk" discussion series tackled what makes policy change successful in its premiere episode Feb. 25, with former Federal Energy Regulatory Commission and Department of Energy officials offering past lessons learned and experiences that could help move energy and climate policy forward.

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With much attention still on Texas as the state continues to reel from a prolonged period of extreme winter weather that brought massive power outages and skyrocketing prices, former FERC Chairman Betsy Moler said she hoped "we're not going to just blame the blackouts on solar and wind energy like the governor did."

Under Moler's leadership nearly 25 years ago, FERC issued Order 888, which mandated open transmission access by utilities and promoted the concept of the independent system operator.

Cheryl LaFleur, a former FERC chairman and current CGEP distinguished visiting fellow who is co-hosting the new series, said she hoped the federal government would play a role in getting to the bottom of what happened and avoid just chalking it up to market failure.

"Never let a good crisis go to waste," she said. "It was San Bruno that led to the Pipeline Safety Act, and it was the 2003 blackout that led to the 2005 Energy Policy Act. I don't know if this is big enough to lead to an act."

CGEP Adjunct Senior Research Scholar David Hill, the series' other host and former DOE general counsel, contended that "one of the problems after an event like this is ... everybody wants to do their inquiry and everybody kind of proceeds to their own corner of defending whatever their role was that might have been a cause of" the problem.

Because DOE is not an economic regulator, "it just seems to me it could play a good role in helping get to the bottom of the causes [of the Texas power crisis] and then actually really helping identify what some actual solutions are," Hill said.

FERC vs. the states

As the topic of climate leadership was raised, Moler said state and federal jurisdictional spats have not gotten any easier to handle, and in fact have "gotten a whole lot harder."

While state and federal jurisdictional issues have always been a hot-button topic, tensions are presently high as regional grid operators are trying to adapt their FERC-regulated markets to keep up with certain state initiatives.

If Congress is able to pass a consensus climate bill, even one less ambitious than the Biden administration's climate plan, then states could work within that overarching structure as they do within the Clean Air Act, preserving their option to pursue more aggressive policies, LaFleur said.

Pointing to the pandemic and chaotic vaccine rollout, LaFleur asserted "sometimes there's a reason why doing something on a national level is better."

Still, Hill suggested there could be state leadership on climate and energy issues that is accommodated through FERC mechanisms. He noted carbon pricing as one of those areas.

Backstop siting

Expanding the US electric grid with more high-voltage power lines is also seen as essential to achieving President Joe Biden's goal of fully decarbonizing the nation's power sector by 2035.

Some transmission advocates have argued that federal lawmakers need to produce new legislation in response to a 2009 ruling by the 4th US Circuit Court of Appeals that threw into doubt FERC's backstop siting authority for interstate transmission lines under the Energy Policy Act of 2005 and a subsequent 2011 9th Circuit ruling that shot down the manner in which DOE designated national transmission corridors. FERC has not been asked to exercise its backstop siting authority since.

LaFleur has been an adamant proponent of FERC reinvigorating backstop transmission siting, but expressed skepticism that FERC could pull it off.

A recent academic paper "suggested FERC could reissue backstop siting rules, find somebody who was willing to bring up a case not in the 4th Circuit, get DOE to redesignate a corridor, and find another test case and try to bring it to the Supreme Court," she said. "I think that's a multi-year effort that would require a very trusting investor to be the test case."

She questioned, even if it were feasible, whether going that route would be pushing too hard on matters that Congress should address. But "because we don't seem to be getting a lot of energy legislation, it seems like FERC and other agencies are just muddling through with what we have, and then the courts just slap them down if they don't do it right."

While it's definitely not what the framers had in mind and likely not what Congress intended, independent agencies have been able to bring about change that sticks within individual industry sectors, Hill said. "That's just sort of the way that it works these days."

He added that today's Congress would never pass a statute "that said ... just and reasonable rates are legal and unjust and unreasonable rates are illegal, ... and FERC go figure out whatever that means." Yet, this malleable nature of "those New Deal laws like that" is what has allowed them to "be sort of formed to whatever the current state of the economy and technology is," Hill said.