When the Senate Energy & Natural Resources Committee convened a hearing on nominations to the Federal Energy Regulatory Commission and Department of Energy on Thursday, it did so under a cloud of uncertainty.
FERC has been without a quorum since former Chairman Norman Bay stepped down in February, stalling permitting decisions on energy projects worth up to $50 billion. The commission is currently embroiled in a high-stakes review of state energy policies and their impacts on wholesale markets, while environmental protestors challenge FERC as a “rubber stamp” for the pipeline industry.
The Department of Energy, meanwhile, had many key clean energy programs slated for deep cuts under the Trump administration’s latest budget proposal. It, too, is running a review of the power sector — a controversial evaluation of baseload generation that critics say is designed to conclude that renewable energy threatens grid reliability.
All of that meant that the power sector’s attention was keenly focused on testimony from President Trump’s FERC nominees — Pennsylvania utility regulator Robert Powelson and long-time Senate aide Neil Chatterjee — as well as that of Dan Brouillette, who has been tapped to be Deputy Secretary of Energy.
But as is often the case with confirmation hearings, the nominees’ comments failed to shed new light on how their agencies would handle key issues.
Confronted with questions of pipeline permitting, state energy policy and wholesale market operations, the two FERC nominees largely fell back on general assurances that they would honor the stakeholder process and support a diverse energy mix. Brouillette, meanwhile, repeatedly assured lawmakers he would stand up for DOE programs facing the ax under the new budget.
The generalized responses helped steer the nominees away from verbal gaffes that could sink their confirmation — and in that sense, the strategy seemed to work. None of the nominees gave an answer that appeared to derail what are expected to be smooth confirmation votes, even as Chatterjee ducked a question about climate change causation.
But if the nominees’ testimony was not especially revealing, the lines of questioning from senators were more so. Throughout the hearing, senators from both parties pressed the FERC nominees on whether the federal government could preempt state energy policies, particularly RPS standards and nuclear subsidies.
The questioning illustrates a growing bipartisan consensus among lawmakers that the federal government should not interfere with state efforts to site and maintain clean energy, indicating a growing skepticism with the outcome of the DOE baseload power study and increasing the pressure on FERC’s market reform efforts.
Senators knock federal preemption
Traditionally, states hold the keys to the power mix. Under the Federal Power Act, they control the deployment of generation capacity within their borders.
Nearly 30 states have instituted renewable portfolio standards, aimed at boosting wind and solar. Last year, New York and Illinois moved to subsidize nuclear generation, sparking discussions of similar programs in four other states.
Across the nation, independent generators are concerned these “around market” policies — combined with low natural gas prices — are depressing electricity prices in wholesale power markets. If the trend continues, they argue, generator revenues could decline so much that many plants are forced to retire, threatening reliability.
Those concerns were the subject of a two-day technical conference at FERC earlier this month, where stakeholders largely settled on a robust price on carbon as a starting point for market reforms. All agreed, however, that any changes would be contingent on a FERC quorum and require years to implement.
In the meantime, the Department of Energy kicked of a 60-day review of the power grid in April, seeking to ascertain whether intermittent resources like wind and solar are forcing baseload generation offline.
Speaking at a conference last month, Secretary of Energy Rick Perry said that the federal government could seek to preempt state policies supporting renewable energy if the review concludes they are threatening reliability.
That did not sit well with a number of senators at the confirmation hearing, who pushed Powelson and Chatterjee on states’ rights. Sen. Cory Gardner (R-CO) phrased the question most directly.
“In the context of wholesale power markets and state energy policies including state renewable energy portfolio [standards], where would you come down on using federal authority to preempt state laws?” he asked.
Powelson responded that he is “respectful of state’s rights.” But if state policy constitutes “an interference in the market design, that is where we need to step in and make decisions,” he added.
Due to time constraints, Chatterjee did not answer Gardner’s question. But Sen. Tammy Duckworth (D-IL) rephrased the state preemption question later in the hearing, asking not just about renewables mandates, but whether FERC would throw out Illinois’ nuclear subsidies.
“We're deeply concerned in Illinois that there would be moves that would prohibit the state from being able to provide clean energy incentives for our nuclear power plants,” she said, “which would then cause them to have to shut down.”
“I believe in state's rights and in local communities making their own determinations,” Chatterjee replied. “I also believe that to ensure safe, affordable and reliable electric delivery we're going to need fuel diversity and I understand that there are very complex questions about how to maintain that fuel diversity with some of the market challenges we face.”
Powelson elaborated on his earlier comments as well, saying his philosophy is to “do no harm to the states.”
“We want these [nuclear] units to run. We want the clean energy baseload resource,” he told Duckworth.
Sen. Jeff Flake (R-AZ) also touched on the nuclear issue, saying that preserving existing plants is “critical” until grid-scale energy storage and new nuclear technologies become economic. Both nominees promised to review the technical conference proceedings and pick up the market reform planning where the commission left off.
Gardner and Duckworth’s concerns about state policy preemption were echoed by Sens. Franken (D-MN), Heinrich (D-NM), King (I-ME) and Cortez Masto (D-NV), all of whom spoke to the reliable integration of renewable energy through anecdotes from their home state or by referencing independent studies.
Such statements were used to point out to the nominees that no matter the results of the DOE baseload study, states and regional grid operators are successfully integrating intermittent resources. Again, Gardner addressed the issue most directly.
“When we're talking about grid reliability issues or studies that are being embarked upon, I think it's important we look at all the experts, whether they are at the National Renewable Energy Laboratory or utilities,” he said. “Take Xcel Energy that has done a remarkable job of integrating various sources, fuel mixes, into the grid while maintaining superior reliability.”
Those lawmakers hailed from states where renewable energy is a major industry, but not every allusion to the DOE baseload study was negative. Sen. Joe Manchin (D-WV), a reliable supporter of the coal industry, expressed concern that retiring coal generation could leave the grid vulnerable to extreme scenarios like the 2014 polar vortex, when cold temperatures cut off gas supplies and froze coal piles, taking some plants offline.
“I think the key to ensuring that reliability is that we have a diverse fuel source including a strong baseload power,” Chatterjee said. “There's obviously considerable pressure on coal and coal's role in our generation mix. I think we need to have a diversified fuel mix going forward.”
Powelson echoed those comments when asked by Manchin which resources he considers to be baseload. A “tectonic shift” in the power sector is pushing the grid toward the integration of more flexible resources, he said, and fuel diversity will ensure reliability through the transition.
Brouillette’s brewing budget battles
While senators peppered the FERC nominees with questions about reliability, grid infrastructure and permitting, Brouillette had a relatively easier line of inquiries, even in light of Trump’s controversial budget proposal and the DOE baseload study.
At the beginning of the hearing, Committee Chair Sen. Lisa Murkowski (R-AK) urged her colleagues not to hold the president’s budget proposal against the deputy secretary nominee.
“While Mr. Brouillette will play a significant role in developing any changes that are made at DOE, I think we should all remember that the budget request was written without him,” Murkowski said. “Now, I don’t agree with everything in it ... but I don’t think it’s going to do much good for us to hold Mr. Brouillette accountable for the budget proposal or delay his confirmation because of it.”
That did not stop senators from referencing the budget in their questions, however. Sen. Angus King made the most pointed critique, listing off the deep cuts to DOE offices focused on renewables, fossil fuels, advanced research and electric reliability.
“We had a hearing in this room about two weeks ago about the grave risks of disruption to our grid by maligned actors via cyber. To be cutting Office of Electricity Delivery and Energy Reliability by almost 50% is irresponsible in the extreme,” he said. “These cuts are absolutely unacceptable and they are cutting in exactly the wrong place.”
But because Brouillette did not help draft the budget proposal, senators heeded Murkowski’s advice not to push him on his support for specific provisions. Instead, most lines of questioning amounted to something similar to King’s, with the Maine senator asking if Brouillette would work to implement higher funding levels in the DOE budget than requested if Congress chooses to appropriate them.
“Yes, senator, that’s exactly what I’m going to tell you,” Brouillette said.
Gardner pushed Brouillette on his attitude toward the National Renewable Energy Laboratory, located in Denver, as well as his support for continued advanced energy research and grid integration funding.
“You have my assurance if confirmed to serve in this role that I will advocate for the programs at the department,” Brouillette said. “The good people at NREL not only invented a bunch of the renewable energy technologies that we're talking about with regard to potential baseload applications, but ... much of the tech they have developed is now in the marketplace. So, again, I will be an advocate for these programs.”
The climate question
The nature of the confirmation hearing meant Trump’s nominees could get away with safe, generalized answers to most of the senators’ questions. Only on climate change did one commit what could be considered a political gaffe.
Asked by Duckworth if they thought human activity is changing the climate, Powelson and Brouillette gave responses that recall the climate stances of Secretary of Energy Rick Perry, EPA Administrator Scott Pruitt and other Trump nominees.
“I am not a climate denier so I recognize that human activity, CO2 emissions is a very big public policy discussion,” Powelson said, before touting Pennsylvania’s record in reducing emissions through coal-to-gas switching.
“The climate is changing and we're all living here so we must have some impact,” said Brouillette, adding that he would work with FERC and Congress on any policies to reduce carbon.
But Chatterjee ducked the question on his personal climate stance completely, instead pivoting to a discussion of FERC’s mandate.
“I think it's important to look at … what role I would play at FERC,” he said. “FERC's instrumental role is in overseeing reliability and I think that any policy put forth by Congress or the administration seeking to mitigate carbon emissions would have to ensure that it not have a negative impact on reliability.”
Chatterjee’s comments represent a narrow view of FERC’s jurisdiction — ensuring reliability and reasonable rates, but not crossing over into climate change mitigation.
That was set to change before Trump was elected. In August of last year, President Obama issued guidance requiring federal agencies to consider greenhouse gas emissions when evaluating any federal action under the National Environmental Policy Act (NEPA), which governs FERC pipeline approvals.
Trump rescinded that guidance in an executive order in March, but environmental advocates are pushing back, stepping up protests against FERC and pushing the commission to consider not only climate change, but the local impacts of pipeline expansion and gas drilling.
The nomination hearing was disrupted four times on Thursday by protesters yelling “FERC hurts families” and other slogans. The demonstrators say FERC is not critical enough in its evaluation of pipeline siting, allowing the industry to use strongarm tactics to take landowner's’ property for pipelines and ignoring the ecological impacts of expanded gas production and transport.
The climate question and environmental objections are unlikely to change the outcome of Chatterjee, Powelson and Brouillette’s confirmation, however. While he dodged the issue of climate change, Chatterjee touted an endorsement from clean energy trade group Advanced Energy Economy as evidence he will not stand in the way of the energy transition.
"I’m in favor of markets, I'm in favor of competition and I'm in favor of technology," Chatterjee said, "especially when that technology is in the best interests of customers.”