The Top Priorities of FERC’s Most Likely New Chairman Under a Biden Administration

Richard Glick, the sole Democrat on the Federal Energy
Regulatory Commission, has some thoughts about what the agency in
charge of key federal energy policies might be asked to accomplish
under the incoming Biden Administration. As the current FERC
commissioner considered most likely to be named chairman once Joe
Biden is president, those thoughts are worth knowing.

On Tuesday, Glick spent a half hour sharing his views with
Gregory Wetstone, CEO of the American Council on Renewable Energy
(ACORE), as part of the trade group’s virtual Grid Forum event.
While he declined to comment specifically on matters before FERC,
Glick did make clear that he’s unhappy with some key decisions
imposed by his Republican colleagues on the interstate energy
market operators under FERC jurisdiction.�

Glick’s perspective on FERC’s orders regarding the capacity
markets run by mid-Atlantic grid operator PJM and
New York state grid operator NYISO won’t
surprise those who’ve read his harsh critiques of what he views
as their illegal and poorly thought-out imposition of federal
limitations on state-subsidized clean energy resources. 

But Glick, the former government affairs director for Avangrid
Renewables and Iberdrola and general counsel for the Democrats on
the Senate Energy and Natural Resources Committee, has also joined
with Republican and former FERC Chairman Neil Chatterjee on some
other decisions. 

Those include FERC
Order 2222
, which orders the country’s interstate system
operators (ISOs) and regional transmission organizations (RTOs) to
open their markets to distributed energy resources, as well as
FERC’s policy statement expressing openness to considering ISO
and RTO carbon
pricing proposals

Chatterjee has speculated to news outlets that his support for
these initiatives led to the Trump
administration replacing him
 as FERC chairman with the more
conservative James Danly earlier this month. While Glick said
he’d read those reports, he declined to speculate on their
accuracy.

Nor did he single out Danly’s recent decisions to cancel a
FERC event to gather information on electric vehicle-to-grid
integration, or call off monthly press briefings that have been
traditional for decades, for particular criticism. 

And while Glick pointed out that “it appears that Chairman
Danly will only be chairman for a couple of months,†he did not
assume that he would be named to replace him. “It’s up to the
new president to decide who leads the commission.â€

But as the only Democrat sitting with two Republicans, and the
Democratic and Republican nominees to fill the commissions’ two
open seats still
awaiting U.S Senate confirmation hearings
that aren’t certain
to conclude in a timely fashion, industry watchers expect that
Glick will indeed be Biden’s choice. 

That won’t change the balance of votes for or against certain
policies — “we have to get a majority of the commissioners to
go along,†he said. But it could allow Glick to set FERC’s
agenda on critical matters ranging from wholesale energy market
operations to interregional transmission policies. 

FERC’s orders on PJM and NYISO capacity markets need to be
revisited

“I cannot talk about pending cases,†Glick said. “But I
think the commission has done a disservice to state clean energy
programs by adopting a MOPR-type program, essentially raising the
costs of generation that’s subsidized in some way by states
focused on clean energy.†

MOPR stands for minimum offer price rule, a regulatory construct
that FERC’s Republican majority has used to order PJM to force
state-subsidized resources to use administratively set minimum
prices when bidding into its roughly $10 billion-per-year capacity
market. A similar concept has informed FERC’s decisions to deny
NYISO’s proposals to exempt state-preferred renewables and energy
storage resources from buyer-side mitigation (BSM) rules. 

Beyond postponing PJM’s
capacity auctions
 for the past two years, FERC’s MOPR orders
could prevent some
clean energy resources
 from clearing the market, driving up
capacity prices to the benefit of fossil fuel-fired power plants,
and exposing customers across its 11 states to billions of dollars
per year in excess costs in the next decade. That possibility has
led states including Illinois, New
Jersey and Maryland
 to consider taking steps to depart PJM’s
capacity market. 

Glick noted that legal
challenges
 to FERC’s PJM order may well lead to courts
agreeing with his view that “I don’t think it’s legal†for
FERC to impose its authority over state energy policymaking in this
way. If courts made that decision, “I think it would be the
obligation of the commission to rework those orders.†

But even if that doesn’t happen, “I think it’s bad
regulatory policy, in the sense that it will raise prices
unnecessarily, but also block states from what I think is their
legitimate role to not only choose their own resource mix, but to
set goals on carbon reduction.†

FERC has authority to unblock transmission, address grid
reliability

Glick added that it’s highly unlikely that the Biden
administration will be able to meet its aggressive decarbonization
goals “unless we can access significant amounts of newly built
renewable resources,†and “we won’t do that unless we
significantly build out the grid.†But U.S. transmission buildout
has been languishing over the past five years, and remains far
behind what multiple analyses say is needed to integrate far-off
wind and solar power. 

To fix that, FERC should use its authority under Order
1000
, created in 2011, to set new ground rules for how costs
are allocated for transmission projects built between different
ISOs and RTOs, he said. As we’ve noted in previous coverage,
Order 1000 has yet
to drive breakthroughs
 in the regulatory and legal bottlenecks
that have largely stymied interregional transmission projects, and
clean energy groups have been asking FERC to take stronger steps to
allow them to move forward.

FERC has also ordered ISOs and RTOs to assess
the resilience
 of their transmission networks amid a rapidly
changing resource mix. California’s rolling blackouts and grid
emergencies this summer, driven by region-wide heatwaves, highlight
the impacts of climate change on energy security, Glick said. 

“There are certainly resource adequacy issues throughout the
West,†he said. “In my estimation, we need to take resource
adequacy more seriously.â€

“That doesn’t mean that you need to impose mandatory
capacity markets like we have in the East,†which the U.S. West
lacks, he cautioned. But it does mean that “we need to figure out
a way to adequately compensate resources for the value they provide
the grid.†

That will likely include energy storage systems playing into the
wholesale market structures being created under FERC
Order 841 mandate
, he noted. “That value may be flexibility,
through ancillary services markets, or some kind of modified
capacity market or flexibility market,†he said. “I think
storage is going to play a big role in that.†

Source: FS – GreenTech Media
The Top Priorities of FERC’s Most Likely New Chairman Under
a Biden Administration