Contested market rule at issue as Danly’s chairmanship ends

Source: By Arianna Skibell, E&E News reporter • Posted: Monday, January 18, 2021

Top Republican energy regulator James Danly is set to preside over the last Federal Energy Regulatory Commission meeting of the Trump administration next week, taking up several pipeline and grid measures on the eve of President-elect Joe Biden’s inauguration.

Commissioners are scheduled to vote Tuesday on several natural gas infrastructure projects, including the controversial Jordan Cove liquefied natural gas terminal in Oregon and the Mountain Valley pipeline in the Virginias. Both projects require further federal approvals to move forward.

Biden is widely expected to transfer control of the independent agency into Democratic hands soon after he takes office Jan. 20, demoting Danly from chairman to commissioner.

“When you look at the agenda, it’s pretty clear the current leadership views this as their last opportunity to act on [market rules changes] in the way they want and to approve lots of pipeline infrastructure that they perhaps think an incoming Biden-chaired FERC will not be interested in approving,” said Jeff Dennis, general counsel and managing director at Advanced Energy Economy and a former FERC employee.

The agenda also features a proposal to expand a contested capacity market rule, which opponents say harms renewable resources, to New York state. FERC came under fire in 2019 when it implemented a similar rule, the minimum offer price rule, or MOPR, in PJM Interconnection, the nation’s largest grid operator. Broadly, the rule blocks sources of generation that receive government subsidies — like many wind and solar farms — from competing in key electricity markets.

“If the commission doubles down and expands the minimum offer price rule, it’s going to push the controversy with states even further,” Dennis said.

Some states including New Jersey and Maryland are weighing an exit from PJM over the market rule change, which they say hampers their ability to reduce emissions in their power mix.

“FERC opened up this can of worms and it’s just endless,” said Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program.

The agency is set to have a 3-2 Republican majority at Tuesday’s meeting. Republican Commissioner Mark Christie, the panel’s newest addition, was confirmed by the Senate late last year along with Democrat Allison Clements. Clements, who took office last month, joined December’s meeting but did not vote. She is expected to fully participate next week.

It’s unclear if Christie, who was sworn in earlier this month, will vote at the meeting.

“We don’t know whether Christie is going to participate,” Peskoe said. If he doesn’t, the commission could reject the MOPR rule in New York, he added.

The commission is also set to weigh items that may factor into the Biden administration’s goal of zeroing out electricity sector carbon emissions by 2035, such as transmission incentives and propping up renewable and storage hybrid projects. And agency observers are looking ahead to how the coming administration can reshape the panel to bolster Biden’s clean energy agenda.

“FERC is now universally recognized as one of the key agencies for meeting the climate agenda of the Biden-Harris administration,” Dennis said during a press briefing yesterday. “There are going to be major expectations for FERC for 2021 and beyond.”

Once Biden promotes either Clements or Democratic Commissioner Richard Glick to chair FERC, the panel will still have a Republican majority. Republican FERC Commissioner Neil Chatterjee’s term expires in June, giving Biden the chance to appoint a third Democrat to the agency.

But Tyson Slocum, energy program director at watchdog group Public Citizen, said the results of this month’s Georgia runoff elections, which handed Democrats control of the Senate, are a game changer for Biden’s agenda.

“Before the election, we were looking at Republican [Senate] control through at least all of 2021,” he said. “When Chatterjee’s seat is up in June, you can be sure Biden is going to put in a nomination that will be confirmed this summer.”

After that point, he said he sees the dynamics at FERC “changing fairly significantly.”

“Both Glick and Clements have talked at length about the need to incorporate climate reviews into the commission’s evaluation of infrastructure siting and approvals,” he said. “So that’s going to be a big issue.”

Observers also said the commission could revisit the MOPR rule, increase enforcement of certain market rules, and encourage coordinated regional transmission planning that could unlock more renewable energy development.

Travis Fisher, who worked on President Trump’s FERC transition team and served as adviser to former Republican Commissioner Bernard McNamee, said with all the “extreme partisanship” the country has endured recently — referring to last week’s deadly insurrection at the Capitol by pro-Trump rioters — he’s looking forward to an “independent FERC continuing to put consumers first.”

“The Commission is known for its professionalism and ability to set partisanship aside for the higher cause of ensuring reliable energy supply at just and reasonable rates,” said Fisher, who now serves as president and CEO of the Electricity Consumers Resource Council.

“We need FERC’s steady hand and strong independence now more than ever,” he said.