Neil Chatterjee, acting chairman of the Federal Energy Regulatory Commission, roiled the power sector this month with the announcement of a short-term proposal to save coal and nuclear plants from retirement.
Now, he says the press and many of his critics misinterpreted his plan.
On Nov. 15, Chatterjee outlined the basic details of what he calls an “interim plan” to preserve at-risk coal and nuclear generators in an interview with Utility Dive. The plan would see FERC issue a "show cause" order to regional grid operators directing them to identify plants that provide "necessary resilience attributes." Those plants would be granted temporary cost recovery through a mechanism that could look similar to existing Reliability-Must-Run tariffs.
Chatterjee offered those details to the press before presenting the full interim plan to other FERC regulators, saying he wanted to calm speculation in the sector about how the agency would respond to a controversial plant subsidy proposal from the Department of Energy.
The interview, however, sparked an outcry from sector observers and former FERC commissioners concerned the acting chairman may be trying to politicize the rulemaking process — using the press to get momentum behind his plan before incoming Chairman Kevin McIntyre is sworn in.
“If I was a commissioner, I would be highly insulted by a chairman taking a proposal to the press before he had the courtesy of talking to me personally,” said former FERC Chairman Jon Wellinghoff, a Democrat appointed first by President George W. Bush. “It is unprecedented in my experience and I would think from a procedural perspective it may have the effect of backfiring.”
Former Commissioner Nora Mead Brownell, a Republican also appointed by Bush, echoed Wellinghoff. Both said Chatterjee’s tactic was a clear departure from normal rulemaking procedures at FERC, which typically involve extensive internal deliberations before any details are given to the press.
“In my experience that has never happened,” Brownell said of Chatterjee’s interview. “It could be because he's new. It could be because he's trained in the Senate which is different. I don't know, but I'll tell you what — I would not be a happy camper.”
Chatterjee, a former staffer for Senate Majority Leader Mitch McConnell (R-KY), pushed back on that narrative on Tuesday, telling reporters after a forum hosted by the Consumer Energy Alliance that his motive was to placate a concerned industry, not preempt the rulemaking process.
“Coming from Capitol Hill, where there's a lot of transparency in the legislative process, and moving to a regulatory body where we don’t do things in that manner, I felt a sense of obligation to assuage folks who on all sides of this were very, very concerned,” Chatterjee said — “to calm everyone down and say we were taking a very thoughtful, deliberative approach.”
“I was in no way trying to preempt something from my colleagues,” he said.
During his Utility Dive interview, Chatterjee presented his interim proposal as one avenue the commission could take to respond to the Department of Energy’s Notice of Proposed Rulemaking (NOPR), filed at the end of September, that proposed cost recovery for generators with 90 days of fuel onsite.
The DOE NOPR attracted widespread criticism from energy analysts and regulators who say it could “blow up” wholesale power markets. Chatterjee has repeatedly said he wants to design a solution to prevent that outcome, and told Utility Dive his interim plan could do that by preventing generators from factoring subsidies into electricity auction bids.
“I believe as we put more meat on the bones that the construct that I've just laid out for you about limiting folks to bidding in their marginal cost and not altering dispatch is a way to minimize those market distortions,” Chatterjee said.
The next day, Chatterjee told reporters at FERC’s monthly meeting that his interim plan meant “we’ve moved past” discussions on the DOE NOPR. But on Tuesday, Chatterjee backed away from his own proposal, saying his interview did not constitute a presentation of the plan.
“I want to be clear: I did not present a plan to the press,” Chatterjee told reporters. “What I said were potential avenues that could be taken.”
“If you even look at what was reported, it's a couple of sentences,” Chatterjee added, referring to the details of his interim plan. “I don’t think it's a fair characterization of saying I floated something to the press before floating it to my colleagues. I was giving a topline description of what conceivably we could be working toward.”
During his interview, Chatterjee read the outlines of his interim proposal to Utility Dive from a note sheet. The explanation spanned two paragraphs — about 300 words — and contained detailed regulatory language, including indications of citations from past FERC cases and entities like the North American Electric Reliability Corporation (NERC) that Chatterjee planned to use as justification for the plan.
The acting chairman did not describe any other policy options for the NOPR during the interview. Even so, he said Tuesday that his description was too brief to constitute a true unveiling of the proposal.
“I read you like two sentences from a one-pager of notes on a vast process,” Chatterjee said in response to a question from Utility Dive. “If you've ever seen FERC orders, two sentences on a one-pager does not equate anywhere near to previewing the construct of a complicated FERC order.”
Chatterjee also pushed back on the media’s interpretation of comments he made at FERC’s open meeting. Asked why he previewed the interim plan to Utility Dive before presenting it to other regulators, the acting chairman referenced his experience in McConnell’s office.
“I studied for eight years under the master of getting these things done,” Chatterjee said.
That quote was interpreted by some as Chatterjee bringing senatorial politicking to FERC — utilizing the media to drum up support for a plan without vetting it first with other regulators. But the acting chairman said that was not his intention.
“I said I studied for 8 years under the master of doing this. I was commenting on Sen. McConnell's leadership,” Chatterjee said. “What he often did in difficult situations was put himself out there, absorb all the risk, absorb all the arrows and take the heat so that his colleagues could then thoughtfully deliberate and address complex issues.”
The idea that “I’m somehow politicizing FERC or politicizing the process,” Chatterjee added, “is absolutely not true.”
“What I was trying to do was calm people down who are following this closely by giving them some topline insight of some possibilities we could consider without any way divulging what we are working towards — just giving people insight into the options that might be on the table,” Chatterjee said. “There's no game-playing, there's no politicizing.”
Chatterjee’s explanation is unlikely to placate critics of the NOPR and his interim support package, many of whom see the current discussion of fuel security and grid resilience as a Trojan horse for efforts to keep aging coal and nuclear plants online.
Brownell, one of those critics, said she viewed Chatterjee’s interim plan as little more than a ploy to make coal and nuclear bailouts appear more palatable to other commissioners than the language of the DOE NOPR.
“Day one when they did this and the [stuff] started to hit the fan, I said they're going to rewrap this, they're going to reposition this and call it something else and probably make it some kind of short-term solution and pretend it’s not the NOPR at all,” Brownell said. “Maybe that gets a vote from someone who said ‘I won't mess up the markets’ because you say 'well this doesn't mess up the markets because it's just short term.'”
Two sitting FERC regulators — Commissioners Cheryl LaFleur and Robert Powelson — have both said they would not support any NOPR solution that puts wholesale market models at risk. Neither regulator has weighed in on Chatterjee’s interim plan, nor has incoming Commissioner Richard Glick, set to be sworn in Wednesday.
Chatterjee’s decision to float his interim idea to the press could be an indication that he has yet to win the support of his fellow regulators, said Joel Eisen, an energy law professor at the University of Richmond.
"The chairman's continuing public monologue about the interim proposal reminds me of the familiar axiom of politics — if a politician is explaining, he's losing," said Eisen. “I don't think he has the votes. If he did, he wouldn't be playing it out in public.”
That would be a “high-risk strategy,” Brownell said. “Breaking with the tradition of consulting with your colleagues on important issues to do trial balloons in the press would not, I think, add to the collegiality [of the commission].”
Even if FERC approves Chatterjee’s interim plan, it likely would not be able to deliver the kind of short-term plant relief the acting chairman envisions, Eisen said. “Show cause” orders are typically used for enforcement actions, and applying one to such a broad market reform could open the commission up to administrative legal challenges from aggrieved consumers and power market participants.
"That would potentially convert the interim proposal into a forum where there would be litigation over the arguments that we have been having about the NOPR," Eisen said.
However the interim proposal plays out, it will have to happen quickly. FERC faces a Dec. 11 deadline to take action on the NOPR — one Chatterjee says the commission intends to meet.
By that time, the commission is likely to have a new chairman — energy lawyer Kevin McIntyre. Confirmed alongside Glick on Nov. 2, FERC has still not confirmed when the incoming chairman will be sworn in, prompting some speculation that Chatterjee may try to hang onto the gavel until after the NOPR deadline.
The acting chairman sought to tamp down on those “conspiracy theories” on Tuesday, telling reporters “there are no Machiavellian games going on,” but leaving the door open for the situation to change in the future.
"That is not my intention or expectation," Chatterjee said when asked if he could still be chairman by the deadline. "But if there are circumstances outside of my control, we will deal with it as it comes."