FERC Chairman tells Congress to Make Energy Policy Boring Again
In these divided political times and 24-hour news cycles, even previously wonky policy topics have gotten pulled into the partisan fray. Federal Energy Regulatory Commission Chairman Neil Chatterjee’s recent comments at an energy industry event on the evolution of energy policy and what it means for the utility sector are a case in point.
Chatterjee told an industry crowd earlier this month that Congress should “make energy policy boring again.”
We say good luck with that, but we understand Chatterjee’s point. Lawmakers and energy industry leaders made similar comments at this year’s CERAWeek in Houston, calling for separating the policy of energy from the politics of campaigns.
Removing the politics from energy policy is not going to happen. The issue is too important for politicians to let it go and not use it to try to rally voters – whether that’s climate activists or energy jobs voters. But let’s take a closer look at why regulators like Chatterjee – himself a long-time political and policy aide to Senate Majority Leader Mitch McConnell before being confirmed to FERC – want Congress to get back to setting policy.
FERC was established by Congress in 1977 as an independent regulatory agency with oversight of interstate transmission of electricity, natural gas and oil. FERC’s mission has expanded over the years to include the permitting of pipelines, export terminals, hydropower projects and other energy infrastructure.
By design, the commission is set-up to be independent from undue political influence. No more than three of its five commissioners may come from a single political party and because its decisions are reviewable by the courts, the commission is meant to be free from direct presidential and congressional interference.
The commission is set up to oversee the implementation of the laws set by Congress, but that role has changed as Congress has been increasingly unable – or unwilling – to address the political questions around energy production and climate change. Activists have taken to targeting FERC as a substitute for action at the congressional level.
Decisions made at commission meetings on whether a project should be permitted have become default signposts for which direction the country is going on energy policy. The end result is that the once sleepy FERC has become a political battleground with its commissioners increasingly divided based on where they stand on climate change.
It shouldn’t be this way.
The chairman didn’t use a version of President Donald Trump’s famous line about making America great again by accident. He knew it would grab people’s attention. His message: regulators are there to carry out the laws set by Congress, not make policy.
According to Utility Dive, Chatterjee said that considering the effects of climate change when evaluating energy infrastructure projects was not within FERC’s jurisdiction.
“If the commission wanted to take a different direction in how we evaluated the climate impacts of pipelines that we evaluate, that directive would need to come from Congress. I don’t believe it is within our statutory purview to take that expansive view ourselves,” Chatterjee said.
Such a stay-in-your-lane approach at FERC bucks the growing trend of federal agencies expanding the scope of federal statutes. In the same way that some judges are viewed to legislate from the bench, environmental advocates increasingly view FERC as a way to advance their goals of moving the nation’s energy mix away from fossil fuel.
“Congress has the tools to effectuate the necessary direction that the country should go, and then it should be up to the agencies like the FERC to implement that direction. But we ought not be setting national energy policy at an independent regulatory agency,” Chatterjee noted in his speech.
Chatterjee has a point. The legislative process provides an opportunity for deliberation by legislators and an avenue for stakeholders to have their concerns heard. It’s a much more transparent process than the regulatory approach and, if voters ultimately don’t like the direction Congress takes, they can vote out their representative in the next election – an option not available with unelected regulators.
But while Congress writes the laws, it’s up to federal agencies like FERC to implement those laws. And since legislation is rarely clearly defined, federal agencies have a lot of influence in how the law is carried out.
In the case of addressing issues with the Public Utility Regulatory Policies Act (PURPA), a review by FERC is underway. Utility Dive reports that Chatterjee sees the need to modernize PURPA as high priority to ensure the law matches up “with the realities of today’s market.”
Chatterjee’s comments, though, also signal a need for Congress to address the underlying questions about advances in wholesale electricity markets and evaluating the impacts of energy use on the climate.
Supporters of renewable energy have raised concerns that opening up PURPA could result in changes that make deploying renewable generation sources more difficult, which speaks to the need for Congress to engage stakeholders through public hearings and the legislative process. Chatterjee, for his part, doesn’t share concerns that renewables could be disadvantaged.
“I think renewables are at a place where they can stand on their own and compete without government subsidies and policies. And so, any reforms that we make to modernize PURPA, in my view, should not and would not have a detrimental effect on renewables because I think renewables can compete on their own,” he said.
PURPA was created in 1978 to encourage fuel diversity at a time when electricity markets were monopolies and oil dominated America’s energy mix. Today, wholesale and retail markets have increased renewable energy use, and advances in storage are creating new opportunities to develop renewable energy assets. Competition has proven an effective driver of new investment in generation and is advancing sustainability goals while reducing carbon output. A greater emphasis on competition and demand pricing would encourage more renewable energy development while making sure ratepayers aren’t left paying for unused capacity and unwanted generation.