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Glick’s FERC seen focusing on transmission, MOPR, environmental justice
22 January 2021Jeff Beattie
President Joe Biden appointed Richard Glick as chairman of the
US Federal Energy Regulatory Commission, a change expected to focus
the agency on key priorities of the administration and green groups
to expand transmission to serve renewables and eliminate Republican
wholesale power market policies seen by critics as disadvantaging
clean energy plants backed by states.
A near-term target for Glick is likely to be the "minimum-offer
price rule" (MOPR) imposed by the previously Republican-led FERC in
the capacity market run by PJM Interconnection, which operates the
grid serving all or parts of 13 Mid-Atlantic and Midwest
states.
Although FERC's Republican majority said the expanded price
floors were justified to prevent subsidized renewables and nuclear
plants from making bids that suppress prices in PJM's capacity
market, Glick and FERC's other Democratic member, Allison Clements,
plus clean energy advocates charge it improperly undercuts state
efforts to increase renewables and decarbonize their grids.
With MOPR critics already having sued to overturn FERC's action
in the US Court of Appeals for the District of Columbia Circuit,
some legal observers suggest a Glick-led FERC might quickly move
against the price floors by asking the court to remand the matter
to the commission for review.
That was the same approach taken by the Environmental Protection
Agency under the Trump administration to scotch President Barack
Obama's Clean Power Plan, which was aimed at stripping carbon
emissions from the US generation fleet.
However, FERC would appear unlikely to take any action that
would hamper PJM's next capacity auction, which already has been
significantly delayed by policy disputes.
The commission under Glick also is expected to prioritize
transmission policy reforms designed to encourage long-haul power
lines of the type that have not been built in recent years despite
FERC's Order 1000, the 2012 rule designed to accomplish that by
compelling new regional and interregional planning processes and
project cost-allocation systems.
However, that is a tricky goal because, unlike with pipelines,
FERC does not have authority to site power lines across states that
object, a problem that has routinely sunk larger projects. States
and consumer groups are also wary of expensive transmission
buildout because the costs wind up on ratepayers' electric
bills.
Order 1000
A Democratic FERC could nevertheless encourage long-haul
transmission by changing Order 1000 to encourage or compel more
inter-regional planning of transmission, which many experts say
has not been effectively pursued by FERC-jurisdictional regional
transmission organizations (RTO) and independent system operators
(ISO). Glick has said publicly it is probably time to review Order
1000, and that more inter-regional transmission planning is
needed.
FERC also could encourage RTOs and ISOs to credit proposed
transmission projects with providing more types of benefits in
cost-benefit calculations, making it more likely the projects will
be approved in their regional transmission expansion plans.
Typically, RTOs assign benefits based on more efficient dispatch
of low-cost power enabled by the proposed lines, and in some cases
to reduction of grid congestion. However, FERC could encourage
grid operators to give more weight to new lines that serve state
"public policy" goals, such as initiatives to expand clean
energy.
Glick also has called out what he calls a "perverse incentive"
in Order 1000 that encourages incumbent utilities to build shorter
power lines designed to fix reliability problems rather than
long-haul lines of the type Democrats and green groups believe are
needed to cost-effectively bring power from remote renewable energy
facilities to urban load centers.
Under Order 1000, projects aimed at meeting public policy goals
must be put out for bid in often contentious competition
proceedings, but some projects designed to fix reliability problems
are automatically assigned to incumbent utilities.
Rather than take on longer, potentially controversial
transmission projects, utilities are getting RTOs and ISOs to
approve smaller projects that can go into service quickly and start
producing returns, Glick has suggested. At an October 2019
conference, Glick said Order 1000 should be reviewed to remove that
incentive, whether that means scrapping competition requirements
in Order 1000 or expanding them.
A Democratic-controlled FERC also is likely to consider reforms
to speed interconnection of renewables to the grid. Currently,
hundreds of gigawatts of wind and solar capacity in the Midwest and
West are in long queues awaiting grid hook-ups, a process slowed by
complex studies assessing the impacts of each individual
hookup.
FERC is under pressure to act on that issue from renewable
generation developers and green groups such as Americans for a
Clean Energy Grid, a coalition encouraging expansion and
modernization of the North American high-voltage grid.
In a January 11 report, the group called the current
interconnection process broken and urged FERC to take a more
"proactive" approach to improving regional and interregional
transmission planning to better incorporate future generation
additions and retirement. The group also urged FERC to end
"participant funding," in which generators pay for system upgrades
needed for interconnection. Instead, FERC should spread costs to
all beneficiaries of the new interconnection, it said.
The same group is planning to release a report on how FERC can
best "spur more cost-effective transmission infrastructure." A
notable list of former FERC members is scheduled to speak at a
webinar accompanying the release, including former FERC chairs
Norman Bay, Jon Wellinghoff, Joe Kelliher, Pat Wood, and Elizabeth
Moler as well as former FERC commissioners Nora Brownell and Phil
Moeller.
Other actions?
As for other possible coming action at FERC, a
Democratic-controlled commission might be inclined to examine RTO
governance, with some stakeholders arguing incumbent utilities
have outsized control over grid operators' processes for reviewing
tariff changes and other initiatives.
Additionally, merchant developers of new transmission projects
say incumbent utilities have thwarted their ability to win new
power line projects in PJM and elsewhere, despite Order 1000
requirements that most large new projects be competitively bid on a
level playing field.
On the subject, Glick told a House of Representatives
subcommittee in June 2019: "One of the things that has been very
enlightening since I have been at the commission…is just the amount
of frustration that there is with RTO governance just around the
country. And it is not just consumer groups—it is other
stakeholders as well that have been very frustrated with it. And I
think that it's worth it for the commission to take a look
at…."
However, legal sources say it is not clear how much authority
FERC has to dictate how RTOs and ISOs run themselves, and in
related matters the commission has trod carefully in the past.
The Democratic-run FERC likely will elevate the issue of
environmental justice, which both Democratic commissioners and
Republican Commissioner Neil Chatterjee cited in voting down two
natural gas pipeline compressor projects at FERC's 19 January open
meeting.
President Biden has pledged to review issues surrounding
implementation of the National Environmental Policy Act and roll
back certain changes enacted by President Trump, and is expected to
elevate the importance of environmental justice in impact analyses
required by the law, which could give FERC more leverage to act on
the issue.
However, Glick and Clements may have to wait months to fully
move on their agenda. That is because FERC remains weighted 3-2 in
favor of Republicans and, barring a surprise early departure by a
GOP commissioner, Biden will not have a chance to name a third
Democrat until 31 June, the end of Chatterjee's current term. Under
FERC rules, Chatterjee could also stay on until Congress adjourns
in December if he chose to.
Green groups applauded Glick's promotion Thursday, with the
Natural Resources Defense Council saying he will bring the
commission a "fresh start."