On June 12, 2018, the Senate Energy and Natural Resources Committee hosted all five FERC Commissioners for an oversight hearing to discuss topics that included the agency’s approach to changes in the makeup of generating plants on the bulk power system and the efficiency of its energy infrastructure permitting processes.
Much of the conversation Tuesday focused on the Trump Administration’s directive earlier this month to Energy Secretary Rick Perry to “prepare immediate steps” to stop the closing of coal and nuclear plants around the country. This follows a unanimous vote by FERC in January to reject a Department of Energy (“DOE”) proposal to provide financial assurances to any generating facilities with the ability to stockpile 90 days of fuel on-site, finding that it did not meet the threshold of offering “just and reasonable rates” (see January 17, 2018 edition of the WER). Under this new directive, the DOE would use its national security authority under the Defense Production Act of 1950 to require grid operators to purchase electricity from coal and nuclear plants. On Tuesday, the Commissioners indicated that they would apply the same “just and reasonable rates” standard to any new proposal from DOE.
While Chairman Kevin McIntyre stated that “it is up to the Secretary [of Energy] to determine if conditions exist” to justify a market intervention on national security grounds, none of the five Commissioners answered affirmatively when asked directly if the country was facing a national security emergency due to power plant retirements. Commissioner Powelson noted that “[i]t comes down to a risk-capacity and a risk-policy analysis…I think we are trying to be diligent and do it in a market construct. And if we do that, I think we’ll be able to assure you that prices won’t go through the roof and that we don’t compromise on moving the product efficiently, safely, and affordably.”
The Committee also questioned the Commissioners on energy infrastructure permitting issues, including pipeline capacity in New England, new shale gas fields, and the increase in renewable energy production. Committee Chairman Lisa Murkowski (R-AK) and Ranking Member Maria Cantwell (D-WA) both asked the Commissioners for assurance that the agency is continuing its efforts to streamline the approval process for new energy infrastructure projects, and Senator Rob Portman (R-OH) expressed concern that the Commission has not yet begun to update an online dashboard of project approval actions as required by Title 41 of the Fixing America’s Surface Transportation Act. Senator Cory Gardner (R-CO) discussed the need for a liquefied natural gas (“LNG”) export terminal on the west coast, to export domestically-produced natural gas to Japan, South Korea, and Taiwan, and expressed frustration at the current backlog of Commission approvals for LNG facilities.
Chairman McIntyre responded that he is personally committed to accelerating the Commission’s permitting process for energy infrastructure projects, and that “[w]e are continuing to explore creative new ways to make our processes more efficient,” including hiring new staff and bringing in third-party contractors to address non-proprietary project components. With respect to updating online dashboards with permit approval milestones, Chairman McIntyre stated that he would “commit to what is legally required.”
A link to the archived video of the hearing is available here.