Grid evolves, and FERC isn’t just for energy wonks anymore

Source: Hannah Northey, E&E reporter • Posted: Wednesday, March 19, 2014

Mentioning FERC, or the Federal Energy Regulatory Commission, at social gatherings inside the Beltway hasn’t always been cool.
Dropping the f-bomb, some energy wonks say, could clear your corner of the room.”If you mentioned FERC at a cocktail party, people would just try and walk away from you,” said Allison Clements, an environmental lawyer at the Natural Resources Defense Council. “You have these conversations about cool renewable energy policies, big-picture federal issues and then you say FERC. It’s like someone dragged a needle across the record and everyone stops talking.”No more.

The electric grid, renewable power, and oil and gas pipelines have moved onto front pages, and FERC has gone with them. The independent agency with about 1,500 employees that oversees the grid, pipelines and wholesale electricity markets even got a shoutout in the new season of Netflix’s political drama, “House of Cards.”

And then there’s the fear factor. FERC and other system overseers have become guards against grid-threatening solar bursts, hackers and terrorists. Last week, the agency grabbed national headlines after The Wall Street Journal outlined on Page 1 a leaked commission report that warned the entire grid could go dark if only nine transmission substations were attacked.

All that makes Clements’ job a bit easier. She leads the Sustainable FERC Project aimed at translating the agency’s often-convoluted regulatory debates and decisions for people who don’t wear pocket protectors. As part of the project, a coalition of 23 groups launched a website that focuses on the commission and its decisions on transmission, the integration of renewables and reliability of the power markets.

Learning to speak FERC — try “nondiscriminatory open-access transmission service” — is not unlike learning Mandarin, Clements said.

Terry Black, who led NRDC’s FERC project for more than a decade, said he struggled to understand the agency when the effort started in the 1990s. But the effort was worth it, he said.

“From about 1995, when I started, through most of 2007, FERC’s focus really permitted environmental groups to have very little impact,” said Black, a former environmental lawyer who’s now retired and living in Sarasota, Fla. “FERC over the last decade has become more open to hearing from us and has grown to value input from nongovernment organizations.”

The importance of the project’s role as a FERC translator was magnified during the turbulent and ultimately unsuccessful nomination of Colorado regulator Ron Binz to lead the agency last year. Binz was attacked by an unprecedented — and ultimately successful — campaign by free-market and conservative groups, some with ties to the Koch brothers whose core business involves petroleum and chemicals.

“What that experience made me realize is there’s a lot of education to be done on the role that FERC plays,” Clements said. “There’s not a lot happening in Congress right now, extreme interests from different sides of the political spectrum are looking to funnel resources … and Ron Binz’s nomination fell victim to that.”

When asked how FERC has changed, Black pointed to the commission’s embrace of an increasingly complex and diverse set of stakeholders.

“When I first started this job, the only people that really I ever saw at FERC were representatives of utilities, whether they were the large [investor-owned utilities] or co-ops or [municipally owned electric utilities], once in a while a consumer advocate; there were very few stakeholders that were equipped to participate at FERC,” Black said.

‘Bully pulpit’

It was in the 1990s that clean energy advocates began to understand FERC’s role in writing grid rules and allowing clean energy sources to compete, Black said.

Between 1995 and 2005, the commission’s policy focus broadened, and it began focusing on integrating different resources onto the grid. It also got sophisticated about operating the energy markets and regulating wholesale power production and sales, he said.

One of Black’s first jobs was to push for strong environmental reviews as FERC implemented landmark electric restructuring rules, such as Order Nos. 888 and 889, which required all public utilities to provide third parties “open access” to their transmission wires.

As the markets were organized and grid operators came into play, more than just the traditional players began showing up at FERC meetings and technical conferences — and slowly, the environmental community found its footing, Black said.

“FERC basically had to make adjustments to reflect the fact that there were a broader array of players to whom they wanted to listen to and who could bring substantively, technically important stuff to the commission for consideration,” he said.

Black eventually helped environmentalists speak in FERC jargon, talk to commissioners and draft comments on the agency’s policy proposals.

Today, that job has only grown more important, he said.

As for clean energy, Black said it was “tough sledding” until President Obama tapped Jon Wellinghoff to lead the agency in 2009. Wellinghoff, who stepped down last year, focused on a number of initiatives — integrating renewables and distributed generation and promoting demand-side energy practices like real-time electricity pricing — that allowed environmentalists, consumer advocates and energy policy wonks to address FERC in a new way, he said.

“[FERC is] a bully pulpit as well as a regulatory agency,” he said.

Although some speculate the agency may become more of a political target as it grows in importance, Clements, for one, is hoping that’s not the case. FERC has a history of being bipartisan and independent. The commission, she noted, doesn’t pick resources it wants to promote.

But FERC’s technocratic nature and acronym-laced language do make it vulnerable to spin, she said.

As an example, Clements pointed to chatter last year of FERC putting in place a carbon tax, favoring renewables over existing generation — all matters over which the agency has no authority.

“The characterization of the role that FERC plays was easy to spin because it’s so complex and a lot of people don’t understand it,” she said. “FERC’s role is just to give resources a chance to compete.”