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Dramatic policy changes, major order reversals unlikely under a Biden-era FERC: attorneys

Highlights

Cooperation between FERC, White House seen likely

Tossing of MOPR, PURPA orders not expected

Washington — Clean energy advocates' hopes for quick reversals of certain policies at the Federal Energy Regulatory Commission that they view as detrimental to the growth of renewable energy are likely out of reach, even if former Vice President Joe Biden wins the presidential election, an attorney with Akin Gump said in an interview Oct. 22.

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Biden has made ambitious campaign promises to achieve carbon neutrality in the power sector by 2035 and to implement a national energy efficiency and clean electricity standard. FERC would play a role in implementing those goals through its regulation of the power sector, in the event of a Democratic win in November, but "a degree of continuity" of approach and policy changes that are "evolutionary in nature rather than revolutionary" are expected, Akin Gump attorneys said in a recent alert to clients.

While Biden stands in stark contrast to President Donald Trump on addressing climate change, his reputation as a moderate who gravitates to the center of the Democratic Party is reflected in his climate plan. Setting him apart from the progressive left and certain ideas in the Green New Deal, Biden "essentially takes an all-of-the-above approach to the generation resource mix and understands that there is a need for natural gas, at least for the foreseeable future," Chip Cannon, a partner at Akin Gump and head of the law firm's energy regulation, markets and enforcement practice, said in an interview.

FERC and the White House

Former FERC Commissioner Marc Spitzer, now a partner in Steptoe's energy practice, spoke of the typically nonpartisan, technical nature of FERC's work, during his firm's annual Regulatory Symposium Oct. 22.

"Now, I understand that during the Trump administration there was certain policy that invoked FERC jurisdiction where that separation [between the White House and FERC] might not have been as strong, ... and going forward in a potential Biden administration with regard to carbon reductions and the move towards deep decarbonization, FERC will be a partner," Spitzer said. "So you can expect over time more cooperation between the agency and the White House than in the past, and I think that's just a facet of the nature of the times that we live in."

Separately, Cannon added that he saw "some truth to the statement that perhaps the current FERC makeup has been more partisan than we've seen it in the past, but at the same time, we haven't seen over the past four years dramatic changes in policy, either in favor of conventional generation or against renewables."

As such, "I actually don't see a new FERC coming in under a Biden administration that would dramatically change policies," he said. And, "as a practical matter, in order to undertake really dramatic changes in policy, that's going to require legislation. There's not an awful lot that FERC can do on its own right out of the gate."

Capacity market reform

FERC power-related actions under the Trump administration that have particularly angered clean energy advocates include capacity market reforms aimed at combating price suppression from state-subsidized generation and updates to the implementing regulations for the decades-old Public Utility Regulatory Policies Act.

"I don't see a Democratic-led FERC coming in and just simply saying that the [minimum offer price rule] doesn't apply," Cannon said. Even if a new lineup of commissioners agrees that states' rights are being intruded upon, that does not solve or rid the problem posed by "an increasing number of resources that are relying on out-of-market payments" and the resulting artificial depression of capacity prices, he said.

"It takes a long time for FERC to evaluate some of these extremely complex issues and then reach a majority of commissioners who are willing to sign off on something," Cannon said. "I wouldn't expect that a Biden administration in the first couple of months could come in and do something that impacts the balance that was established by FERC in the MOPR orders."

He likened FERC to a huge ocean-going vessel. If a new captain comes onboard and wants to go left instead of right, while all the bells, whistles and knobs are being pulled to make that happen, the vessel "keeps going on the same path for quite some time, and the arc of change can be very, very slow."

PURPA regulations

FERC in July revised its PURPA regulations (RM19-15), giving states far more leeway in setting the rates that utilities are required to pay qualifying facilities for their output.

"I think even Democrats would probably be hesitant to push back too hardly on the fact that, in these areas where you have competitive markets, perhaps the need for PURPA isn't as strong," he said.

Though he considered a complete reversal unlikely, Cannon said there were likely some areas of that order that a Democratic-led commission could chisel away at, such as pricing of avoided costs in locations that do not have regional markets and modifications to the one-mile rule for determining whether multiple generating facilities should be considered part of a single facility as part of the QF certification process.