FERC’s Clark stepping down, warns of Clean Power Plan costs

Source: Rod Kuckro and Emily Holden, E&E reporters • Posted: Monday, January 25, 2016

Tony Clark, the lone Republican member of the Federal Energy Regulatory Commission and a vocal skeptic of the Obama administration’s power-sector climate rules, is stepping down after 16 years as a state and federal electricity regulator.

Clark, 44, said he made the decision over the holidays after talking with his family. “I didn’t overanalyze it a lot. It comes down to a gut reaction,” Clark told E&E in an interview yesterday after FERC’s monthly meeting in Washington, D.C.

Clark said he will not pursue a reappointment when his term ends June 30.

“I’ve been in government for a long time,” he said, noting that he was elected to the Legislature in his home state of North Dakota after just turning 23 years old. Clark served 12 years on the North Dakota Public Service Commission before coming to FERC in 2012.

Clark’s departure is now the second since Philip Moeller, who had been the commission’s other Republican member, stepped down in October to work for the Edison Electric Institute. FERC is designed to be a five-member commission. But if the White House doesn’t fill the GOP slots before Clark leaves, the top U.S. regulator of interstate electricity and natural gas will be down to three Democratic members.

That comes just as states, utilities and regional electric grid operators start putting plans in place for compliance with U.S. EPA’s Clean Power Plan rule for cutting carbon dioxide emissions.

“The commission can function at three members,” he said. “I don’t have any intention to go anytime in the immediate future, and to the degree I have the ability to stay on, I intend to.

“It helps, from a commission credibility standpoint, to have a bipartisan commission,” he said.

Costs of cutting carbon

Much like Moeller, Clark has been a constructive critic of EPA’s rule to curb carbon emissions from power plants. Under the rule, power-sector emissions would fall 32 percent below 2005 levels by 2030. Clark has argued that the timeline is too speedy a shift away from fossil fuels and toward renewable energy, given the electric reliability challenges tied to the transition.

The Clean Power Plan’s effects on grid reliability were the top concern when the rule was first proposed. But the final rule’s inclusion of a reliability safety valve in concert with giving states more time to comply has allayed those concerns to some degree.

“I think cost is the bigger challenge than reliability, not that reliability is a slam dunk. It’s not,” Clark said. “But engineers are very good at making the system work. It always becomes a question of at what cost.

“The Clean Power Plan will require rapid transition to new forms of generating power,” he said. “If you make the switch in such a way that it’s done before the infrastructure and resources are there to be able to support the new form of generation, it will cost more.”

Not every state or region faces the same reliability and cost challenges, he acknowledged.

In cost terms for some states, the “math of the Clean Power Plan” and the profile of its electric generating resources mean “you may not be having a large increase above what their costs would have been anyway,” Clark said.

“It just depends on where you are, what your baseline starts out as,” he said. “Those who advocate for the Clean Power Plan do themselves a disservice to dismiss those concerns that people have in certain parts of the country.

“You can’t build enough wind turbines in a state that is trying to replace huge megawatts of coal power,” he said. “These are real issues that aren’t going to be easy to get over for certain states.”

Trading option

Clark expects states, including those suing EPA over its carbon rule, to work on writing state implementation plans (SIPs).

“I wouldn’t want to pretend that the fact that they’re engaging in the SIP process is somehow acquiescence of or liking the Clean Power Plan. It’s just sort of the reality that a [federal implementation plan] really does scare them,” Clark said.

He noted that in previous rounds of environmental rulemaking, grappling with a federal compliance plan “has not been a pleasant process” for states.

The risk is that “we end up with 47 plans that all look really, really different and that don’t work well together and you’ve got a patchwork quilt of state implementation plans that are not really optimizing the markets,” Clark said.

“Somebody could make an argument that we’d actually be better off as a whole if we just had one federal implementation plan and emissions credit trading could be done across the country,” he said.

One of the discussions going on among states, utilities and regional grid operators is about regulating carbon through already existing power markets. Clark said he worries about states crafting compliance plans narrowly tailored to their own interests, “without recognizing that the grid doesn’t really care about political lines.”

“I’m not cheerleading for cap and trade here,” he said, “but from a market standpoint, that can work within the markets without really distorting them.”

When it comes to physical infrastructure such as gas pipelines and transmission lines needed to help meet the EPA rule, “states have a lot to say,” he said.

In the interview, Clark urged the states to keep a close eye on their own laws to ensure electricity consumers get a fair shake as the grid transitions to cleaner sources of electricity.

“When you’re able to move power around more efficiently, it’s good for consumers, and you get more robust reliability,” he said. “There’s a lot that state and local leaders can do to either hold up projects or allow them to be done efficiently.”