Governors' Wind Energy Coalition

Hannah Northey: Well, Norman Bay has stumped many an agency watcher, and a lot of his opinions or positions on the big debates before the Federal Energy Regulatory Commission right now are unknown. So members of the Senate Energy and Natural Resources Committee are going to have a lot of questions. They’re going to be very eager to know where he stands. One issue that could come up is LNG exports. The FERC looks over the environment reviews at the actual export terminals. You know, is there enough pipeline to tap into new shale plays? What about grid reliability as new EPA rules take place? I know a couple senators will ask maybe about market fixes to ensure that nuclear and coal plants aren’t phased out in a very gas-rich market.

And of course we’re going to hear about enforcement. Right now Bay is most well-known as the director of FERC’s Office of Enforcement, Harvard-educated, a former New Mexico prosecutor, and a number of senators may ask about criticism that FERC has recently received that, you know, what does constitute manipulation. So that being said, sources say maybe Bay will answer a lot of those questions in private ongoing meetings, so we’ll have to see.

Monica Trauzzi: Mary Landrieu is now chair of the committee. She’s also in the middle of a very tough re-election campaign. She has some natural gas interests certainly, coming from Louisiana. How do you think she’s going to guide the discussion?

Hannah Northey: Right. So Senator Landrieu is in a tight race with Congressman Cassidy in Louisiana. They have both positioned themselves as proponents of exports so she’s likely to ask about LNG exports and FERC’s review, although a lot of the congressional focus has been on the Department of Energy. So she could ask about that, but also she’ll ask about infrastructure. The senator during her first hearing as chairwoman of the ENR noted that the oil and gas boom in the United States is bringing back companies that have gone overseas, including one that went to Chile and came back to Louisiana. So she’ll likely ask him about his views on exports and infrastructure.

Monica Trauzzi: There’s a hedge fund making the rounds with the press; I know we’ve both spoken to them. They’re also talking to folks on the Hill raising some questions about Bay’s work at the Office of Enforcement. Is that the kind of thing that might cause some fireworks during this hearing?

Hannah Northey: I definitely think it’s going to be brought up. It’s the Powhatan Energy Fund LLC. It’s run by Kevin and Rich Gates out of Pennsylvania. They’ve launched a public campaign to draw attention to the fact that FERC is investigating a trader that they hired, and the campaign has shed a light on some of the enforcement activities at FERC. Now it’s also garnered the attention of The Wall Street Journal‘s editorial board, which is very influential among conservative circles. So when I spoke with Kevin Gates he said that he has reached out to members of the ENR Committee. A number of senators I talked to said that they had recently read about it in The Wall Street Journal. So just how much traction they can gain is unclear. What’s important to remember is that there’s not criticism of Bay’s oversight within FERC publicly at this point, and you know, this hedge fund is not necessarily a household name like JPMorgan. So it’s unclear at this point.

Monica Trauzzi: So handicap for us Bay’s chances of making it through the committee process. What are you hearing from the senators who you’ve spoken to?

Hannah Northey: Well, Bay has warmed up to some very important allies on the Senate ENR Committee. What’s important is in light of the Binz — the failed nomination of Ron Binz last year, the former Colorado regulator, you know, if Republicans do line up again to oppose Bay, every Democratic vote will count. So Mary Landrieu — I asked her how she felt. She said she had a very good meeting with Bay; he’s very knowledgeable about the energy markets. But she also wanted to take the temperature of the rest of the committee. Another question mark is Sen. Joe Manchin, a Democrat from West Virginia. He said he’s keeping an open mind, but he does have questions about Bay’s energy policy chops. So, you know, if Manchin does vote with his colleagues, his Democratic colleagues, it could be very easy sailing for Bay. If not, it’s unclear. What’s important to remember is that Bay does have backing from the Senate majority leader. He can bring the vote up onto the Senate floor, although that’s a rare maneuver and sources say that may not happen.

And another question mark of course is Republicans. Sen. Lisa Murkowski has also said she wants to hear more about Bay’s energy policy positions. So that’ll all be meat for the confirmation hearing.

Monica Trauzzi: Also before the Energy Committee will be Cheryl LaFleur’s renomination to the commission. She receives pretty high praise from most of the folks who work directly with her. What do you think her prospects are?

Hannah Northey: Sources say that she has broad support; she’s going to sail through. She is the most senior Democrat at the agency, years of experience in the energy field. And she has done a really great job of proving herself, taking on the issues of grid reliability as EPA rules take effect. One of the looming questions is why the White House overlooked her as chair because she is so experienced and she has so much broad support. So you may see those dynamics playing out at the confirmation hearing.

Monica Trauzzi: All right, Hannah, thanks for coming on.

Hannah Northey: Thank you.

Monica Trauzzi: More Cutting Edge coming next Friday. We’ll see you then.

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