FERC, DOE oversight could heat up if Democrats flip House

Source: Rod Kuckro, E&E News reporter • Posted: Wednesday, September 12, 2018

Should Democrats regain control of the House, the Federal Energy Regulatory Commission and Department of Energy can expect a level of oversight the two agencies rarely experience.

And that could include a close look at what longtime observers of FERC and former commissioners have characterized as an overly politicized agency in the Trump era and under Chairman Kevin McIntyre.

As Democrats grow increasingly confident they’ll retake the House for the first time since 2010, leaders are openly talking about conducting concerted oversight of the Trump administration’s environment and energy policies and rule rollbacks (E&E Daily, Sept. 6).

At the House Energy and Commerce Committee, that responsibility would fall to Rep. Frank Pallone (D-N.J.), the ranking member of the energy panel who has a 99.98 probability of winning in November, according to FiveThirtyEight.com.

“We would certainly conduct oversight of President Trump’s efforts to upend competitive electricity markets by providing preferential rates and other subsidies to coal and nuclear generation,” said Pallone spokesman C.J. Young.

Such a probe likely would involve seeking testimony, documents and other records from FERC as well as DOE, where the idea sprang of a “Grid Resiliency Pricing Rule” providing for subsidies that was first proposed to FERC in September of 2017.

At a hearing before the Energy and Commerce Committee on Oct. 12, 2017, Pallone told Energy Secretary Rick Perry that he had “many concerns” with the proposal, “starting with the fact that this is chiefly a policy matter that should be left to Congress and the states.”

He delivered to Perry that day a letter posing a series of questions about the “motivation behind the proposal” and asking for a detailed accounting “of the process you used to develop this proposal, including the records of the meetings you and your staff had and the taxpayer funds spent developing a proposal that seems directed at helping a select group of favored energy sources.”

It took DOE until Jan. 12 to reply with what Pallone’s spokesman called a “woefully inadequate response” from DOE Deputy General Counsel Eric Fygi that ducked all of Pallone’s questions.

DOE is leading a Trump administration effort to develop a scheme to support coal and nuclear power plants deemed critical to national security. While any such plan was certain to be the subject of litigation, the prospect of a Democratic House adds an additional element of strategic defense to whatever the administration decides to do.

“Looking forward, Mr. Pallone will continue to push for answers from the Secretary on this issue and remains opposed to the President’s efforts to bail out these non-economic facilities,” Young said.

Pallone would aim to conduct oversight of the rebuilding of the electric grid in Puerto Rico and the need to build a modern and more resilient national grid generally, Young said.

Pallone also has teamed with Sen. Maria Cantwell (D-Wash.), the ranking member of the Senate Energy and Natural Resources Committee, in asking FERC for an expanded investigation into the Rover pipeline and its parent company, Energy Transfer Partners LP, regarding spills and construction permit violations.

Feet to the fire

As much as Pallone and his fellow Democrats may have a list of topics for oversight, there will be plenty more from interest groups unsatisfied with the extent of oversight under House Republicans.

It’s not that the current GOP leadership of the energy committee didn’t hold hearings on electricity industry issues. Beginning in 2017, the panel launched a series of 10 hearings entitled “Powering America.” They touched on business fundamentals, markets and technology.

But their purpose was not oversight but to serve as a primer for members of the committee, most of whom have a limited understanding of the complexities involved in regulating the electricity sector at the federal and state level and the limitations placed by the Federal Power Act on what the federal government and FERC in particular can do.

Tyson Slocum, energy director for the group Public Citizen, noted that there hasn’t been a formal oversight hearing focused on FERC since Trump took office. And he suggested “the most radical restructuring of electricity policy” is happening behind closed doors.

“We’ve had hearings that bring commissioners in to ask questions, but there’s never been a subject matter oversight hearing where the committee is requesting documents in an effort to hold official’s feet to the fire,” Slocum said.

“If you see a change of leadership in the House,” he added, “you’re absolutely going to see a big focus on FERC and aggressive oversight of what’s going on at DOE in relation to developing these massive bailout proposals.”

In particular, Slocum predicts oversight of FERC’s recent order on the PJM Interconnection capacity market reforms. The order “sets the table for a DOE bailout,” he asserts, as it describes the type of out-of-market subsidy that DOE has suggested for coal and nuclear plants, he said.

As the administration is now “roping in the national security apparatus to work on national security justifications, Congress absolutely needs to be involved in this,” Slocum said.

Another attorney who does regular business before FERC also said the administration’s effort to rewrite federal rules governing electricity markets to benefit existing coal and nuclear plants would be front and center under a Democratic-led House.

The focus of that inquiry would be whether FERC is getting direction from the White House or DOE. That would be viewed, said the lawyer, as interference with the work of an independent regulatory agency.

Sue Tierney of the Analysis Group is a former state regulator and assistant secretary for policy at DOE.

It would be relevant to have House oversight of FERC’s gas pipeline certification process, she said, “given the increasing controversies over FERC’s reviews and disagreements among members of the commission.”

Next could be issues related to the interface of the natural gas and electricity industries.

“Compared to the electric industry, the gas industry has very different standards for things like cybersecurity, system reliability and so forth. Given the increasing reliance of each industry on each other, Congress might take a fresh look at what is needed on the gas side to align with electric-system reliability requirements,” Tierney said.

She also suggested the committee might examine Federal Power Act tensions between state policies in organized wholesale regions and capacity markets. “Clearly this is an issue of importance to the nation, the states and the industry,” she said. “Right now, the courts are drawing the lines for state/federal jurisdiction.”