The Federal Energy Regulatory Commission started this year with a bang, and a full plate.
Willie Phillips was named FERC acting chairman in early January, days after Winter Storm Elliott triggered rolling blackouts in the Southeast, brought the PJM Interconnection, the largest U.S. grid operator, to the brink of outages and almost left New York City without natural gas for weeks in the dead of winter.
Through the year, FERC’s four sitting commissioners — Phillips and Allison Clements, both Democrats, and James Danly and Mark Christie, both Republicans — grappled with the fallout of Winter Storm Elliott and other grid reliability issues while trying to align the agency’s grid interconnection and transmission planning and cost allocation rules with the country’s changing energy resource mix.
Partly related to reliability concerns, the commissioners also focused on wholesale power markets in PJM and the Northeast.
Meanwhile, the commissioners, working with an unfilled seat, and the agency’s roughly 1,500 employees oversaw the U.S. electric and gas wholesale markets, reviewed hydroelectric licensing and relicensing applications, and processed transmission rate cases, among other duties.
Through mid-December, FERC issued about 7,600 orders and opinions, down from about 7,920 in the same period last year. They included about 3,220 orders and opinions related to electricity, 1,470 related to natural gas and 28 related to rulemakings, roughly the same number as in 2022.
In this FERC in Focus, we’re ranking the FERC commissioners’ best quotes from the year, partly with an eye for what that may signal about the agency’s agenda in 2024.
“This is too close,” Phillips said in September after FERC and North American Electric Reliability Corp. staff said a record-setting 90.5 GW, or 13%, of the generating capacity in the Eastern Interconnection — the grid system covering two-thirds of the U.S. — failed to run or operated at reduced capacity during Winter Storm Elliott.
FERC in February approved two rules that aim to improve reliability during cold weather, but ordered NERC to strengthen one of them dealing with power plant weatherization requirements. “Waiting for four additional winters before weatherization requirements kick in does not reflect the urgency we feel,” Clements said about NERC’s weatherization proposal.
Clements cautioned that just building more pipelines and other gas facilities won’t solve the problem highlighted by the failure of gas-fired power plants to run during extremely cold weather.
“The infrastructure that was there didn’t work,” Clements said. “From the [natural gas] production head through generation, we saw failures.”
Besides extreme weather, FERC’s commissioners had an eye on the changing resource mix in the United States and the pace at which power plants are retiring.
Christie said at a Senate Energy and Natural Resources Committee hearing in May that power plants are being retired more quickly than they’re being replaced, pointing to estimates from PJM. About 40 GW, or 21% of PJM’s installed capacity, is at risk of retiring by 2030, the largest U.S. grid operator said in a Feb. 24 report. PJM expects only 15.1 GW to 30.6 GW of accredited capacity to come online by 2030.
“The arithmetic doesn’t work,” Christie said. “This problem is coming. It’s coming quickly. The red lights are flashing.”
Christie fears capacity markets may not be ensuring there is enough generation on the grid.
“The capacity markets are not all right,” Christie said in March at an agency meeting. “There are fundamental problems specifically in the multi-state capacity markets — ISO New England, [the Midcontinent Independent System Operator] and PJM — that are directly leading to serious reliability problems.”
Clements is especially concerned about New England. “The system continues to operate on a knife’s edge during extreme winter weather events,” Clements said. “It is not enough to sit by with our fingers crossed for mild winters each year.”
Several times last year, Danly said he thought wholesale power markets, and FERC’s oversight of them, were critically flawed.
“FERC has allowed the markets to fall prey to the price distorting and warping effects of subsidies and public policies that have driven the advancement of large quantities of intermittent renewable resources onto the electric system,” he told the Senate Energy and Natural Resources Committee in May.
Danly also dissented from a February decision to change PJM’s capacity auction rules after the auction was held, saying the decision was akin to playing blackjack at a rigged casino.
At that casino, in the middle of a hand, the house draws a 17. “Even though 17 is a predictable — and even likely — hand, the dealer announces it is ‘anomalous’ and makes up a new rule on the spot: 17 is the new blackjack,” Danly said. “No one is allowed to draw again or change their bets … The house saves a bit of money on one hand, but no one ever plays blackjack at the Federal Energy Regulatory Casino again.”
Responding to one of Phillips top priorities, FERC bolstered its environmental justice efforts this year, including holding its first ever conference on the issue. However, some environmental justice advocates say they have yet to see any significant change in the agency’s pipeline and liquefied natural gas decisions.
The agency’s infrastructure reviews are governed by law and precedent, which accounts for the commission’s practice of approving almost all projects, according to Phillips. In recent years, FERC has rejected one natural gas project, the Jordan Cove LNG export proposal in Oregon.
“Our hands are tied,” Phillips said at the environmental justice meeting. “That is something that we are required to do.”
In a major decision, FERC approved new interconnection requirements that aim to make it easier for planned generation to connect to the grid.
“We’ve seen long [interconnection] wait lines, which is hurting our reliability, hurting our resilience, and raising costs for all customers,” Phillips said in July after FERC issued Order 2023. “This rule is a major first step in our journey to addressing transmission reform.”
However, the interconnection rule is just a first step on improving the interconnection process, according to Clements.
“The reality is, when we have these complex issues, you don’t just solve it, like the good old days, with one rule,” Clements said. “This is going to be a series of steps.”
Looking ahead to next year, Phillips in November said he aims to issue a rulemaking to reform transmission planning and cost allocation as soon as possible.
“A robust transmission network is the foundation for electric reliability, especially in the face of the extreme weather,” he said. “That historic final rule on interconnection is the first of what I hope will be several important measures that the Commission takes to ensure that our electric grid is reliable, affordable and sustainable.”