Soon after taking office, President Biden nominated Richard Glick, a Democratic commissioner on the Federal Energy Regulatory Commission (FERC), as the Commission’s new chair.[i] Though the Commission is expected to maintain a Republican majority until Commissioner Neil Chatterjee’s term ends June 30, Glick has begun shifting the priorities of FERC, which regulates the interstate transmission and sale of electricity, natural gas, and oil, to align with President Biden’s ambitious energy and environmental goals.[ii] The following examines Glick’s three main priorities under the new administration, each of which could substantially change the energy regulatory landscape.
On February 11, Glick announced his plan for the Commission to prioritize equity and environmental justice in its decisionmaking.[iii] Glick created a new, senior position to oversee that work and note he supports FERC’s consideration of equity, environmental justice, and climate in its siting decisions.[iv] This change is set to take place on the heels of President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad (“Order”), which creates a White House Environmental Justice Interagency Council and Advisory Council and directs federal agencies to consider environmental justice in executing their responsibilities.[v]
FERC is, as a result, more likely to consider greenhouse gas emissions and environmental justice when approving liquified natural gas certificates.[vi] This change follows a 2017 decision by the U.S. Court of Appeals for the D.C. Circuit that held FERC was required, in an Environmental Impact Statement (EIS), to estimate the amount of greenhouse gas emissions that a pipeline transporting natural gas to Florida power plants would produce.[vii] The court noted that FERC was charged by Congress with considering “public convenience and necessity” in pipeline construction and operation applications, and directed FERC to prepare an EIS consistent with the opinion.[viii]
Coupled with President Biden’s Executive Order directing the Secretary of Interior to pause new oil and gas leases on public lands and offshore waters, this change could potentially set the stage for a considerable nationwide slowdown of the buildout of new pipelines and gas projects. [ix]
Transmission and capacity market reform
FERC was under heavy scrutiny from stakeholders and renewable energy companies during the Trump Administration for approving rules that they argue will make it more difficult for renewable energy resources to compete in capacity markets. For example, in late 2019, FERC issued an order directing PJM Interconnection, the regional transmission organization (RTO) for thirteen states and the District of Columbia, to expand its Minimum Offer Price Rule (MOPR) to account for the impacts of state-subsidized resources on the capacity market.[x] PJM conducts auctions where resources bid in and are rewarded a fixed price for their capacity in return for their ability to meet certain energy demand in the future.[xi] However, many fossil fuel companies argued that PJM’s MOPR was putting gas resources at a disadvantage compared to subsidized resources.[xii]
Then-Commissioner Glick dissented, criticizing the MOPR and arguing that the order would increase costs for consumers, create barriers for states’ clean energy programs, and “slow the transition to a clean energy future.”[xiii] Legal challenges to the order are currently being heard by the U.S. Court of Appeals for the Seventh Circuit.[xiv]
Chairman Glick has stated that he will reconsider the operation of capacity markets, prioritize transmission reform,[xv] and work to lower barriers for cleaner energy sources to enter the market.[xvi] Changing the policies that Chairman Glick argues will hamstring states’ clean energy programs could arguably make it easier for renewable energy resources to compete and could help prevent wholesale markets from stunting states’ clean energy programs. [xvii]
Finally, Chairman Glick stated that he is committed to “build[ing] public confidence in the commission’s decision-making process.”[xviii] In December, Congress passed the FY2021 Omnibus and COVID Relief and Response Act, which funds an Office of Public Participation (OPP) at FERC.[xix] The Act directs FERC to submit a report to the Committees on Appropriations of the House and Senate detailing how it will establish the office, including a proposed organizational structure and budget.[xx]
The OPP will give the public new opportunities to weigh in on energy decisions affecting the nation. Importantly, it allows FERC to compensate individuals whose participation in proceedings “substantially contributed to the approval . . . of a position advocated by such person.”[xxi] Many states have similar forms of intervenor compensation, including California, Minnesota, and Wisconsin.[xxii] Buildout of this office will greatly expand opportunities for public participation during a time when major changes to the energy landscape are accelerating.
Disclaimer: The author is a Policy Advisor in Governor Pritzker’s office, where she advises on energy and environmental policy. This post does not reflect the views of Governor Pritzker or his administration.
[i] Press Release, President Biden Names Glick Chairman of FERC, http://www.ferc.gov, (Jan. 21, 2021). https://ferc.gov/news-events/news/president-biden-names-glick-chairman-ferc (last visited March 1, 2021).
[ii] Federal Energy Regulatory Commission, What FERC does, http://www.ferc.gov, (Nov. 19, 2020), https://www.ferc.gov/about/what-ferc/what-ferc-does (last visited March 1, 2021); Catherine Morehouse, Glick named FERC Chair, promises ‘significant progress’ on energy transition, Utility Dive (Jan. 21, 2021), https://www.utilitydive.com/news/glick-named-chair-of-ferc-promises-significant-progress-on-energy-transi/593721/.
[iii] Press Release, FERC Chairman acts to ensure prominent FERC role for environmental justice, http://www.ferc.gov, (Feb. 11, 2021), https://ferc.gov/news-events/news/ferc-chairman-acts-ensure-prominent-ferc-role-environmental-justice (last visited March 1, 2021).
[iv] Timothy Gardner, U.S. energy regulator to create environmental justice position: chairman, Reuters (Feb. 11, 2021). https://www.reuters.com/article/us-usa-energy-environmental-justice/u-s-energy-regulator-to-create-environmental-justice-position-chairman-idUSKBN2AB2DC
[v] Exec. Order No. 14,008, 86 Fed. Reg. 7629–7632 (Jan. 27, 2021), https://www.federalregister.gov/documents/2021/02/01/2021-02177/tackling-the-climate-crisis-at-home-and-abroad
[vi] Morehouse, supra note 1.
[vii] Sierra Club v. Fed. Energy Reg. Comm’n, 867 F.3d 1357, 1371 (D.C. Cir. 2017).
[viii] Id. at 1373, 1379.
[ix] Exec. Order No. 14,008, supra note 5, at 7619.
[x] Order Establishing Just and Reasonable Rate, 169 F.E.R.C ¶ 61,239 (2019) (to be codified at C.F.R. pt. 35)
[xi] PJM, Capacity market (RPM), http://www.pjm.com, https://www.pjm.com/markets-and-operations/rpm.aspx (last visited March 1, 2021).
[xii] Catherine Morehouse, MOPR reconsidered: competitive generators move away from FERC’s PJM order, toward carbon pricing, Utility Dive (Nov. 13, 2020), https://www.utilitydive.com/news/competitive-generators-reverse-course-begin-moving-away-from-ferc-pjm-mopr/588959/.
[xiv] Zack Hale, 7th Circuit, not DC Circuit, to hear challenges to PJM capacity market overhaul, S&P Global (May 6, 2020), https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/7th-circuit-not-dc-circuit-to-hear-challenges-to-pjm-capacity-market-overhaul-58484554.
[xv] Catherine Morehouse, ‘No compelling reason not to’: former FERC chairs, commissioners call for federal transmission overhaul, Utility Dive (Jan. 28, 2021), https://www.utilitydive.com/news/no-compelling-reason-not-to-former-ferc-chairs-commissioners-call-for-f/594107/.
[xvi] Catherine Morehouse, Glick vows to prioritize transmission, reassess capacity markets if named FERC chair, Utility Dive (Nov. 18, 2020), https://www.utilitydive.com/news/glick-vows-to-prioritize-transmission-reassess-capacity-markets-if-named-f/589252/.
[xvii] Catherine Morehouse, Glick sees consensus on FERC considering climate, environmental justice in siting gas infrastructure, Utility Dive (Feb. 12, 2021), https://www.utilitydive.com/news/glick-sees-consensus-on-ferc-considering-climate-environmental-justice-in/594970/.
[xviii] Jeff St. John, New FERC chair’s focus: environmental justice and climate change impacts, Green Tech Media (Feb. 15, 2021), https://www.greentechmedia.com/articles/read/new-ferc-chairs-focus-environmental-justice-and-climate-change-impacts.
[xix] Rao Konidena, FERC’s Office of Public Participation takes shape, Power Grid International (Jan. 12, 2021), https://www.power-grid.com/policy-regulation/fercs-office-of-public-participation-takes-shape/.
[xx] Consolidated Appropriations Act, Pub. L. No. 116-260, # Stat. 2021.
[xxi] 16 U.S.C. § 825q–1.
[xxii] Cal. Pub. Util. Code Ann. § 1802.5 (West 1992); Minn. Stat. Ann. § 216B.16 (West 2019); Wis. Stat. Ann. § 196.31 (West 2011).