Formed in 1977 in response to the 1973 oil crisis, the Federal Energy Regulatory Commission (FERC) oversees the transmission and wholesale sale of electricity and natural gas and regulates the transportation of oil by pipeline in interstate commerce. FERC also reviews proposals to build interstate natural gas pipelines, natural gas storage projects, and liquefied natural gas (LNG) terminals, in addition to licensing non-federal hydropower projects. As of November 15, 2017, FERC is at full capacity with five commissioners. The U.S. Senate has approved the final two commissioners which will help with the backlog of permit decisions and in reviewing the plan offered by Rick Perry, the Secretary of the Department of Energy (DOE), for evaluating aging coal and nuclear plants.

FERC Structure and Rules

• FERC is composed of five commissioners each serving five-year terms nominated by the U.S. President and confirmed by the U.S. Senate
• Legally, no more than three commissioners of one political party may serve on FERC at any given time
• FERC is not able to make decisions without a quorum (three seats filled out of five)

Key 2017 Events

• After January 2017, retirements and resignations led to four empty FERC seats, leaving Democrat Cheryl LaFleur as sole member

• The lack of a quorum led to increased concerns in the energy, manufacturing, and business communities and prevented permitting decisions on energy projects like natural gas pipelines and export terminals from moving forward. Gas industry leaders, for example, feel the lack of quorum held back billions of dollars of infrastructure buildout
• FERC re-attained a quorum in August after the Trump Administration nominated Richard Glick, a Democrat, in June clearing the way for the Senate to confirm two other GOP nominees: Neil Chatterjee and Robert Powelson
• Hearings were held in September regarding Trump’s pick to lead the commission, Kevin McIntyre. Subsequently, McIntyre and Glick were confirmed by the Senate, installed on November 2, and expected to be sworn into office the week of November 13

About the New FERC Commissioners

• Neil Chatterjee:
  • A native of Kentucky, a state where coal powered more than 80% of the electricity consumed in 2016
  • Served for almost eight years as an energy policy aide to Senator Mitch McConnell (R-KY), including coordinating opposition to the Clean Power Plan
  • Prior to working for McConnell, employed by the National Rural Electric Cooperative Association
• Richard Glick:
  • Former general counsel to the Senate Energy and Natural Resources Committee for the Democrats
  • Prior to the Senate, head lobbyist for Iberdrola Renewables Inc., the U.S. subsidiary of a Spanish renewable energy firm since renamed Avangrid Renewables
  • Before working as lobbyist, Glick served as an adviser to Bill Richardson, DOE secretary under former President Bill Clinton
• Kevin McIntyre:
  • Previously worked as an attorney with Jones, Day and co-leader of their energy practice
  • Jones, Day is a global law firm with numerous former employees now working for the Trump Administration, including White House Counsel Don McGahan
  • McIntyre represented energy clients at Jones, Day on matters ranging from compliance and enforcement to trading, exports, and marketing
• Robert Powelson:
  • From June 2008 until joining FERC, worked for the Pennsylvania Public Utility Commission (PPUC), including a stint as commission chairman 2011-2015
  • In November 2016, elected president of the National Association of Regulatory Utility Commissioners, a Washington-based advocacy group
  • Prior to PPUC, President of the Chester County (PA) Chamber of Business and Industry

Implications

• Commission Chair McIntyre appointed to serve two consecutive terms through 2023, giving him the opportunity to wield extensive influence
• As of November 15, FERC has, for the first time since 2015, its full complement of five commissioners, three Republicans and two Democrats. The commissioners have already made decisions on gas pipeline approvals and will have numerous more ahead of them
• FERC must decide on the DOE Resiliency Pricing Proposal by December 11. Our read of the little-used law suggests FERC has three options for that decision: adopt the DOE recommendation in the NOPR, adopt but amend the recommendation, or choose to not adopt the recommendation
  • DOE Secretary Rick Perry’s “Resiliency Pricing” plan aims to enable plants with 90-day supplies of on-site fuel in organized markets to fully recover their costs. It asserts that such plants are more resilient during extreme weather such as during a deep winter freeze in early 2014 (“polar vortex”) and that the retirements of those facilities harms grid reliability
  • Comments have been varied and the debate is intense
  • Chatterjee told journalists from Bloomberg Markets in late October during a roundtable on-the-record discussion that coal and nuclear are “firm, non-interruptible fuel sources” and are therefore more resilient to extreme-weather events than fuels which must be obtained off site such as natural gas
  • Commissioners Cheryl LaFleur and Robert Powelson have said the proposal does not accurately characterize the role natural gas plays in ensuring grid reliability. Powelson went so far as to dismiss the notion that natural gas generators ‟didn’t perform” during the polar vortex in a mid-October speech, rejecting a main assumption (coal and nuclear as “non-interruptible”) behind DOE’s cost recovery rule for coal and nuclear plants
  • Chatterjee, in public statements made in mid-November, appeared to advocate for an “interim solution”: a short-term plan to keep as many coal and nuclear plants open as possible which simultaneously does not distort markets or alter dispatch practices for transmission grid operators, while FERC conducts additional research

More Information

POWER Magazine: FERC’s Chatterjee Has Interim Plan to Prop Up Coal, Nuclear

The Advocate (New Orleans): FERC Quorum Raises Likelihood of Pipeline Approvals

Green Tech Media: What FERC Commissioners Are Saying About DOE Proposal

Forbes Magazine: The Logic Behind Rick Perry’s Letter

This report is part of the VIU Minute series. To view all featured Minutes, please click here.

Additional Contributing Author: Tony Gonzalez