FERC commissioner calls for ‘new approach’ to capacity markets in wide-ranging NARUC talk

Source: By Gavin Bade, Utility Dive • Posted: Thursday, February 14, 2019

Glick’s comments at NARUC’s winter meeting on Tuesday highlight the persistent controversy over capacity markets across multiple FERC-regulated markets.

Last year, FERC invalidated capacity market rules in ISO-New England and PJM, the nation’s largest power market. Regulators approved new rules for ISO-NE last March, but have yet to rule in the high-profile PJM docket.

Glick gave no indication of timing for that decision in his Monday appearance, but lamented the significant time and resources spent on capacity market proposals over the last year.

“It’s incredibly complex what’s going on in PJM and we constantly get proposed changes not only to capacity markets but also to energy markets,” Glick said, “and I just worry that we’re making it a lot more complicated than it is and not necessarily producing the results.”

The Democrat, appointed by President Donald Trump in June 2017, said the experience with PJM and ISO-NE changed his outlook toward capacity markets in general.

“One lesson I would take out of [my first year] is probably not to have a mandatory capacity market or at least find a way to get to resource adequacy without going through a mandatory capacity market,” Glick said. “I think we’ve seen in various regions that do employ that approach a significant amount of confusion, and a significant amount litigation, angst, and maybe higher prices than we’d otherwise have.”

In some regions, Glick said capacity constructs are encouraging “substantial amounts of excess capacity beyond the level most people think is reasonable.” PJM, for instance, currently sits at a 22% reserve margin, though Glick did not mention it by name.

“Then we see people proposing to change that to actually increase the price so we can actually have more capacity,” Glick said, “and to me that’s not good for consumers and arguably is not just and reasonable.”

Grid operators with mandatory capacity markets today could look to MISO, Glick said, which allows utilities to meet resource adequacy requirements within their service territories and runs a voluntary capacity market.

“We need to figure out a new approach to capacity markets if we’re going to have them,” Glick said. “MISO doesn’t have some of the same vertical dis-integration as maybe some of the other regions in the Eastern Interconnect but their approach to resource adequacy seems to be a little more peaceful and maybe a little more efficient than some of the other regions.”

Glick also criticized the continued impasse at FERC over natural gas infrastructure. The commission currently has one vacancy on its five-member board after the death of Republican Commissioner Kevin McIntyre in January. That allows Glick and fellow Democrat Commissioner Cheryl LaFleur to deadlock votes on gas infrastructure and other issues until a replacement is named or LaFleur leaves FERC later this year.

Though he has voted against every major natural gas proposal in his time on the commission, Glick said he could envision supporting a project if FERC fully analyzed the greenhouse gas emissions associated with it.

“There are certainly pipelines I could vote for,” he said. “If the commission will weigh the benefits of the pipeline against greenhouse gas emissions then I could end up voting for pipelines.”

“But I can’t do that,” he added, “if the commission is going to … put blinders on when it comes to greenhouse gas emissions.”

Glick called on Republican colleagues to reverse FERC’s 2018 policy limiting climate considerations in natural gas project reviews, saying that information should be in the commission record even if they do not consider climate change a serious threat.

In doing so, he referenced Commissioner McNamee’s past videotaped comments questioning climate science, released by Utility Dive during his confirmation battle last year.

“I don’t know how [McNamee] feels about the science, I just saw that tape,” Glick said. “But let’s just say that if any commissioner didn’t believe in climate change that person might weigh it differently than someone like myself who believes climate change is an existential threat, but nonetheless I don’t think that’s something you should oppose including in the record, and I would hope he wouldn’t be.”

Commissioner McNamee, however, did not address his view of climate science or any other substantive FERC issues in his first public appearance since his confirmation in December. Instead, his short conversation with Virginia Commissioner Judith Jagdmann — his former boss in the state Attorney General’s office — touched on his private sector experience and the broad decision-making process for public policy issues.

“What’s really important to me is what are people actually saying?” McNamee said. “Like, really read what is the testimony, what is the position, what is the pleading, what is the issue that they say? One of the biggest challenges in Washington is people assume that you’re coming from one perspective or another and they don’t listen enough I would argue.”

McNamee left the event without taking questions from state regulators or reporters, though he told the state officials his “door is open” for conversations. A FERC spokesperson said McNamee did not have time for questions because he had to return to the commission.