Public Power CEO hits FERC for ‘pushing’ jurisdiction

Source: Rod Kuckro, E&E News reporter • Posted: Wednesday, June 20, 2018

The head of the nation’s public power lobby ramped up criticism yesterday of the chief federal energy regulator for “pushing its jurisdictional boundaries at the expense of state and local authorities.”

Sue Kelly, president of the American Public Power Association, in an interview said the Federal Energy Regulatory Commission is “making it harder and harder” for APPA member electric utilities to manage efficiency and storage activities within their footprints.

Earlier yesterday, she spoke to roughly 1,300 attendees at APPA’s annual meeting in New Orleans.

The organization represents more than 2,000 not-for-profit, community-owned utilities that serve 49 million customers.

“Recently, FERC said in one order that it has exclusive jurisdiction under the Federal Power Act to regulate energy efficiency resources in wholesale electric markets. And in a second order, it ruled that retail customers can sell their storage services directly into the wholesale market,” Kelly said.

APPA, along with a number of other energy trade groups, asked FERC to rehear both of those orders.

“We cannot stand by while FERC continues to erode state and local authority over what are clearly retail activities,” Kelly told the APPA attendees.

Later, she elaborated on the continued blurring of lines between state and federal jurisdiction that has in recent years put APPA at odds with both FERC and various regional grid operators, such as PJM Interconnection.

“The situation is complex. We’re increasingly concerned as we see these [FERC] decisions impinge more and more on retail activity,” Kelly said, referring to the local sale of electricity that has been historically managed by municipal utilities.

But now, FERC decisions are sanctioning “things that are not only behind our city gates; there are things that are behind our [own utility] meters,” she said.

“What goes on our systems is retail activity. We have our own services and programs. We do our best to enhance and support those activities, and then we participate in the wholesale market.

“But when our customers go over our heads to do that, we lose economies of scale, and those customers who aren’t participating are the worse off for it. We would like to be able to aggregate those activities for the benefit of everyone on our system. The FERC is making it harder and harder to do that if everyone is freelancing,” Kelly said.

Wait and see on DOE support for plants

APPA is closely watching the development of a Trump administration proposal to buy electricity from unidentified U.S. coal and nuclear power plants to prevent their “premature” retirement, Kelly said.

“We are not entirely unsympathetic, especially in the case of nuclear plants. Because that’s technology we need to try and keep going in the United States,” she said.

The Department of Energy is reportedly looking at using the Defense Production Act, the Federal Power Act or both to craft a way to financially subsidize certain nuclear and coal plants.

“It’s a precedent I’d want to think really hard about,” Kelly said. “And it’s clear that DOE is not done thinking about it either. I’m not sure that’s where they’ll end up.

“We want to wait to see what happens and work with our government partners to try and make sure we come out to the best possible place with the soundest legal reasoning behind it,” she said.

So far, no APPA official has met with Bruce Walker, DOE’s assistant secretary for electricity, on the possible options for plant support, she said.

As to how APPA and its members would react should a proposal emerge that is objectionable, she said, “It is hard to say. It depends on how strong the jurisdictional authority” is that DOE relies on.

“If they come up with a legal, jurisdictional rationale that is strong, it would to be difficult for us to say, ‘No, we’re going to assert our local authority and federal authority can’t override it.’

“It’s going to depend on the strength of the authorities and whether or not we agree with the direction the federal government wants to go. It’s all TBD,” Kelly said.

She reminded her members yesterday that “neither the [regional transmission organizations] nor [the North American Electric Reliability Corp.] nor FERC have said there is a supply emergency that calls for such direct federal intervention.”

So Kelly may find partners in grid operators such as PJM as well as FERC, with whom APPA is clashing on jurisdiction matters.

“I take my allies where I find them,” Kelly said.