DOE gets no love from FERC at Senate hearing

Source: Rod Kuckro and Blake Sobczak, E&E News reporters • Posted: Thursday, June 14, 2018

No member of the Federal Energy Regulatory Commission spoke up in support of the Trump administration’s plan to subsidize failing coal and nuclear plants at a meeting of the Senate Energy and Natural Resources Committee yesterday.

The opportunities were there as questions were posed both by senators skeptical of such aid and those in support.

It was the first appearance of the entire commission before the Senate panel in more than a decade.

On June 1, the National Security Council met to discuss a memo circulated by the Department of Energy of a plan to use the Federal Power Act — which would involve FERC — and the Defense Production Act to guarantee payments to coal and nuclear plants deemed critical to national security in support of a resilient bulk power system.

Committee Chairwoman Lisa Murkowski (R-Alaska) asked whether the retirements of coal and nuclear plants have “reached the point where the quality of electric service is compromised.”

“There is no immediate calamity or threat to our ongoing ability to have our bulk power system operate and satisfy our energy needs,” said FERC Chairman Kevin McIntyre.

His colleagues agreed.

Commissioner Robert Powelson said “a hard and fast mandate” by DOE would upend power markets that “are working hyper-efficiently right now.”

“I don’t think it’s appropriate to put the FERC in the arena of creating moral hazards in these markets,” he added.

Commissioner Richard Glick advised that FERC stay “vigilant” as to the effects of plant closures on the power grid, but said the agency needs to be “wary of people using the situation as an excuse to achieve market change they haven’t been able to achieve otherwise.”

Only Commissioner Neil Chatterjee expressed some sympathy for the aim of DOE’s draft proposal.

Even though the grid has been able to handle a number of serious challenges and outages in recent years, mostly from weather events, “we shouldn’t assume that that good fortune will continue,” he said.

“In my view, no action is akin to driving a car without a seat belt,” Chatterjee said.

“We can have disagreements about what the remedy may be, but I think [DOE] raises a real issue,” he said.

Who’s securing the pipelines?

Several FERC commissioners voiced concerns about the current level of cybersecurity protections in place among the nation’s gas transmission grid. But they stopped short of endorsing the Trump administration’s reported plan for addressing the issue by boosting “baseload” power sources featuring on-site fuel.

“This intervention could potentially ‘blow up’ the markets and result in significant rate increases without any corresponding reliability, resilience, or cybersecurity benefits,” Powelson said in prepared testimony.

Chatterjee told lawmakers yesterday that natural gas infrastructure makes a “particularly attractive target” for hackers given its importance to the bulk power system. Yet he also said he supports doubling down on FERC’s current “two-pronged” approach to addressing threats to the electric grid, through a combination of mandatory security standards and voluntary best practices.

FERC does not have direct jurisdiction over pipeline cybersecurity. Instead, the Transportation Security Administration, an agency better known and better funded for its role guarding U.S. airports, relies on just a few specialists to monitor the security of hundreds of thousands of miles of gas pipelines. TSA does not set binding security requirements, instead counting on voluntary cooperation from industry (Energywire, May 25, 2017).

Glick, who worked as general counsel for the Senate committee’s Democratic members before joining the energy regulator, urged his former colleagues to look for new strategies.

“Congress should consider whether pipelines should be subject to mandatory cyber and physical security standards, and whether the TSA is the appropriate agency for overseeing pipeline security,” he said.

The leaked DOE memo pointed to cyber and physical security risks posed by the grid’s growing reliance on natural gas pipelines, contending that coal and nuclear provide more secure alternatives (Greenwire, June 1).

Sen. Maria Cantwell (D-Wash.), ranking member of the committee, cast doubt on that claim, noting that she is “very well aware where our cybersecurity attacks are coming from.”

“Some of these [attacks] have been into our plant operating systems, and so it doesn’t matter what the plant operating source is. The issue is that cybersecurity could disrupt any type” of power generation, she said, adding that she does not agree that “somehow these other sources can be more reliable and secure.”

‘Let’s move on’

The most dramatic moment of the hearings came when Sen. Martin Heinrich (D-N.M.) asked, “Do any of you believe that in the wholesale power markets we’re facing an actual national security emergency at the moment?”

Commissioner Cheryl LaFleur spoke up immediately, saying, “I do not, senator.”

Heinrich asked whether any of the four remaining FERC members would want to answer “yes” to his question.

After an awkward silence, he said, “Let’s move on then.”

Democrats in their questions harped on FERC responsibility under the Federal Power Act to maintain “just and reasonable rates.”

Cantwell called the administration plan and its impact on FERC “a threat on your independence and oversight.”

Keeping rates low for consumers “is your day job,” she reminded the commissioners.

Powelson replied, citing data on steadily declining electricity rates in most parts of the U.S. and opining that the restructuring the electricity markets sanctioned by FERC starting in the 1990s “is arguably one of the largest wealth transfers to take place in our nation’s history” in favor of consumers.

Glick said a study he has seen put the impact of the DOE plan on consumer rates at between $30 billion and $65 billion annually.

In terms of ensuring grid resilience, McIntyre said the agency is working through its inquiry into how to ensure the electric grid is resilient enough to handle a major disaster.

“We need to take a longer-term lens and ask ourselves what should the future landscape of our generation resource mix look like and ensure that we get that right, as well,” he said.