This article is part of Utility Dive’s 2023 U.S. Power Sector Outlook series. A roundup of all the articles is available here.
The Federal Energy Regulatory Commission is heading into 2023 with a new leader, Acting Chairman Willie Phillips, a vacant seat and a packed agenda that includes transmission planning reform, grid reliability and possible market reforms.
Last week, Phillips outlined his priorities, which include grid reliability, transmission expansion, environmental justice and equity.
Being down a commissioner generally won’t affect FERC’s agenda, according to Phillips. “The commission will not sit on our hands on any important matters that need to move forward,” he said.
Nonetheless, the outlook for the agency shifted sharply late last year when Sen. Joe Manchin, D-W.Va., declined to hold a nomination hearing for former FERC Chairman Richard Glick.
Is a vacant seat a barrier to action?
FERC now has four sitting commissioners, potentially leaving them evenly split on some issues. They are Democrats Phillips and Allison Clements and Republicans James Danly and Mark Christie.
Without three Democrats, it may be hard to advance pending initiatives such as transmission reform and revisions to FERC’s decades-old approach to reviewing natural gas infrastructure, according to Tyson Slocum, director of Public Citizen’s Energy Program.
“A lot is going to hinge on who that fifth commissioner is going to be,” Slocum said. “I think it's reasonable to assume that you're going to have a stronger rulemaking if you've got that third Democrat.”
Based on past nominations, it will likely take at least six months before Glick’s seat is filled, according to John Moore, director of the Sustainable FERC Project at the Natural Resources Defense Council.
“The times are pressing and the last thing we need is for FERC to be in some kind of a stasis over the next year or two,” Moore said.
However, it’s not uncommon for the agency to operate with four commissioners, according to Marc Spitzer, a former FERC commissioner and a partner at Steptoe & Johnson.
“My experience when FERC was less than five members was not a particularly drastic or dramatic change in the course of business,” Spitzer said.
Compromise may be easier now that FERC commissioners and staff are working in the agency’s headquarters instead of from home during the COVID-19 pandemic, according to Spitzer. Face-to-face meetings make it easier to broker agreements compared to Zoom meetings, he said.
A focus on transmission, reliability and extreme weather
Todd Snitchler, Electric Power Supply Association president and CEO, expects Phillips, former chairman of the Public Service Commission of the District of Columbia and a North American Electric Reliability Corp. employee, will focus on grid reliability.
“I don't think that means he moves away necessarily from some of the work that FERC is doing, but I do think that that may be the perspective by which he views things,” Snitchler said.
Two issues teed up for action are regional transmission planning and cost allocation, and generator interconnection reform, according to Christine Tezak, managing director at ClearView Energy Partners, a research firm. The comment periods on the proposals closed in September and October, respectively, she said.
Other issues that fall in “quick succession” behind transmission are grid operations during extremely cold weather such as Winter Storm Elliott and gas-electric coordination, which appears to have contributed to a lack of fuel for some power plants during the December cold snap, according to Snitchler.
“Those pieces and parts all have to fit together and work properly in order for the system to function reliably,” he said. “[Phillips] will probably pay attention to those. It's a question of where he puts them on his agenda.”
Public Citizen’s Slocum also expects FERC to tackle weather-related market reforms.
“We can't have a new normal of every winter going through this massive uncertainty. It's just paralyzing,” he said.
FERC will also likely continue to investigate possible market manipulation in natural gas markets, he said, pointing to an investigation of market behavior during Winter Storm Uri.
FERC and the consumers’ pocketbook
FERC will likely continue to have a heightened sensitivity to how its decisions affect consumers, according to Tezak. In a period of inflation, rising interest rates and high commodity prices, “the idea of incremental rate impacts becomes more intense and so I don't expect that to decline over the next year,” she said.
“I don't expect [the commission] to be punitive, but I certainly am not holding my breath for a lot of ‘FERC candy’ to come rushing out the door,” she said.
Christie, a former state utility regulator, has expressed concerns about how FERC decisions on issues such as return on equity incentives affect ratepayers, Tezak noted.
“FERC needs to be absolutely focused on rising consumer costs for power,” Christie said Jan. 19 in response to news that the average price of electricity jumped 14.3% last year.
Electricity affordability is also a major issue for Phillips.
“When it comes to the clean energy transition, if we cannot do this affordably, we will not do it successfully,” Phillips said Jan. 19 during a media briefing. “It is incumbent upon all of us to make sure that we think about the least of us when we make our decisions.”
A do-nothing Congress?
Meanwhile, with the Senate controlled by Democrats and the House run by Republicans, observers doubt the 118th Congress will pass significant energy legislation this year.
Even on issues like permitting reform, which in the past had bipartisan support, Democrats and Republicans will likely be divided, according to Tezak. House Republicans will likely try to show they are in line with positions taken during the Trump administration, and given divisions in Congress last year, bridge-building between the parties appears doubtful, she said.
House Republicans intend to hold hearings to review the implementation of the Inflation Reduction Act and the Infrastructure Investment and Jobs Act, legislation that includes billions in spending on the clean energy sector, according to Slocum.
“I don't see prospects for bipartisan legislation making it to the President's desk on energy or climate issues because energy has unfortunately just become an electoral lightning rod,” he said. “We're going to see lots of hearings about why Democrats and the Biden administration hate American energy so much, and how the reliability problems we've seen are the result of an over-focus on addressing climate change and promoting renewables.”
Top priorities for Cathy McMorris Rodgers, R-Wash., chair of the House Energy and Commerce Committee, include grid reliability, strengthened energy supply chains and permitting reform, she said last month.
Sen. Manchin remains chairman of the Energy and Natural Resources Committee. Manchin’s support was key to passage of the Inflation Reduction Act.