United States: FERC Commissioners Explain Priorities, Respond To Trump DOE Directive

The Commissioners of the Federal Energy Regulatory Commission (FERC or the Commission) testified on June 12 at an oversight hearing before the Senate Committee on Energy and Natural Resources. They addressed FERC-jurisdictional issues, including grid modernization, resiliency, security, and enforcement, and President Donald Trump's recent directive to US Department of Energy (DOE) Secretary Rick Perry to prepare immediate steps to stop the loss and retirement of nuclear and coal generation facilities. The Commissioners' testimony provides an insight into the issues that FERC may prioritize in the near future.

Overview of FERCPriorities

The Commissioners addressed several topics, including:

  • Resilience of the Bulk Power System – The Commissioners stressed the importance of protecting the resilience of the bulk power system (BPS). Chairman Kevin McIntyre said BPS resilience will remain a top priority during his tenure, and noted that FERC is working with Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs) to develop a common definition and understanding of the term "resilience" and with state regulators and other stakeholders to address resilience at the distribution level.

    Commissioner Cheryl LaFleur added that the Commission's recent efforts seek to inform the current debate on grid resilience, and focus on whether the continued retirement of certain uneconomic coal and nuclear generating facilities threaten grid resilience. She also explained that "the resource turnover [that the United States is] experiencing is an expected consequence of markets, and the lower prices that result from well-functioning markets are a benefit to customers, not a problem to be solved, unless reliability is compromised."
  • Natural Gas Pipeline Certificate Policy Statement -– The Commission provided an overview of FERC activities that could change the process that FERC uses to certify interstate natural gas pipelines for construction and operation under the Natural Gas Act. The Commissioners explained that FERC issued a Notice of Inquiry seeking stakeholder perspectives to help the Commission explore whether, and if so, how, it should adjust (1) its methodology for determining whether there is a need for a proposed new interstate gas pipeline project; (2) its contribution to applicants' exercise of eminent domain and landowner interests related to proposed projects; (3) its evaluation of environmental impacts of proposed projects; and (4) its timeline for determining whether it will authorize applications for construction and operation of proposed projects.
  • FERC Policies under PURPA –Mr. McIntyre also addressed his recent directive that FERC Staff re-initiate a review of FERC's policies under the Public Utility Regulatory Policies Act of 1978 (PURPA). The Commissioners explained that PURPA, which broadly establishes a class of generating facilities entitled to special rate and power sale treatment and partial relief from certain regulatory burdens, was enacted to foster alternative energy resource development and to conserve resources understood to be scarce in the late 1970s. However, according to Commissioner Neil Chatterjee, the energy landscape today differs in that alternative energy resources—namely solar and wind power—are no longer fledgling technologies. As a result, the Commission will be investigating various areas of its PURPA regulations to modernize and encourage competition in a manner that more accurately reflects the availability of generation resources today. Mr. McIntyre added that he expects an opportunity for stakeholder comment on these issues.
  • Cybersecurity – The Commissioners expressed support for a "two-pronged approach" to addressing cyber threats to the BPS. According to the Commissioners, this approach consists of a combination of the development of mandatory reliability standards of voluntary best practices and information sharing among stakeholders and federal and state regulators. They stated that, in recent years, FERC Staff has increased its interaction with its sister agencies, including the US Department of Homeland Security (DHS) and DOE, to share information and cooperation on cybersecurity issues.
  • Addressing Specific Energy Resources – FERC explained that it has taken steps to address the rapid increase in the export of natural gas. Technological enhancements led the United States to become a net exporter of natural gas in 2017 through a combination of increased pipeline exports to Mexico, reduced imports from Canada, and increased liquefied natural gas (LNG) export activity. To address the increased LNG workload, FERC has hired private contractors to increase the size of its workforce working on LNG export projects.

    In addition, the Commissioners addressed recent decisions concerning storage and aggregation of distributed energy resources. Specifically, the testimony referred to FERC's recent decisions in Order Nos. 745, 755, and 764, which were aimed at encouraging the incorporation of variable energy resources into wholesale markets, including compensation for demand response resources, and compensation for new resource technologies like energy storage. In addition, the Commissioners testified that FERC issued Order No. 841 in February 2018 to further encourage energy storage participation in wholesale capacity, energy, and ancillary service markets operated by RTOs and ISOs.

Fuel Security Concerns Due to theVariable Generation Mix

After the Commissioners presented their opening statements, the Senate committee's questions during the Q&A portion of the hearing primarily concerned President Trump's directive to the DOE to prepare immediate steps to stop the loss and retirement of "fuel-secure" plants around the United States. These "fuel-secure" plants would include coal and nuclear power plants, according to a draft DOE memorandum circulated in the press. That memorandum suggests that DOE would require RTOs and ISOs to purchase energy from designated plants for a period of up to, and possibly more than, 24 months to prevent any near-term decommissioning. That draft memorandum premised its possible issuance on the concept that baseload generation, including nuclear generation, is important to national security because those resources enhance the resiliency of the electric system in response to extreme weather events, cyberattacks, and other emergencies.

Mr. Chatterjee said that although utilities should be mindful of the risk of relying too heavily on a singular source of energy, such as natural gas, competitive markets generally encourage utilities to make reasonable fuel choices. He also highlighted the potential impact of a cyberattack on the natural gas pipeline system.

Commissioner Robert Powelson added that "[t]he frequency of cyber and physical threats to the nation's energy infrastructure is only increasing [and] [t]he Commission is aware of this and has made cyber and physical security a top priority." However, he emphasized that "unprecedented steps by the federal government—through the president's recent directive to the DOE to subsidize certain resources—threaten to collapse the wholesale competitive markets that have long been a cornerstone of FERC policy."

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions