Why ‘Shutting Down FERC’ is No Option for the Country
By Roy M. Palk, LeClairRyan
The Trump administration is under fire for leaving unfilled positions in federal agencies such as the U.S. State Department. Fortunately, the administration is moving forward to restore a quorum to the critically important Federal Energy Regulatory Commission (FERC), which has been stalled since February when Chairman Norman Bay resigned with two existing vacancies on the 40-year-old panel. On top of that, another commissioner recently announced plans to depart FERC at the end of this month as well.
For the energy sector, the vacancies at FERC have been a vexing problem. The lack of a quorum has put gas- and power-related projects—by some estimates worth a total of about $50 billion—in limbo for months now. Fortunately, both Republican FERC nominee Neil Chatterjee, an energy advisor to Senate Majority Leader Mitch McConnell (R-Ky.), and Robert Powelson, former chair and current member of the Pennsylvania Public Utilities Commission and also president of the National Association of Regulatory Utility Commissioners, received friendly receptions last month during their Senate confirmation hearing. (Full disclosure, I have worked with Mr. Chatterjee in the past.)
The nominees’ treatment by anti-pipeline activists, however, was another matter.
Whether their concerns are climate change, water pollution or anything in between, environmental activists continue to protest what they see as FERC’s predisposition to approve pipeline projects. The Trump administration’s picks, from the perspective of many environmentalists, will only do harm the environment. During the hearings by the Senate Energy and Natural Resources Committee, four chanting protesters were actually arrested for the disruptions they created.
But efforts to, as the protesters chanted, “Shut FERC Down!” are misguided. Simply put, it is an oversimplification, and often a deliberately uncharitable one at that, to describe FERC as merely a rubber stamp for pipeline projects. In fact, its mandate is quite broad. It includes, not just the interstate movement of electricity and gas, but also many other issues related to big-picture integration, including grid security and cyber security.
Those who doubt the importance of FERC’s role should consider the article published on June 12 by The Washington Post under the headline “Russia has Developed a Cyberweapon that Can Disrupt Power Grids, According to New Research.” The piece describes how hackers with ties to the Russian government have created malware called CrashOverride “that has the potential to be the most disruptive yet against electric systems that Americans depend on for daily life.” In a test run of sorts back in December, the malware successfully shut down about a fifth of the grid in Kiev, Ukraine.
Practically speaking, any successful move to “shut down FERC” would be nearly as harmful to grid stability here in the United States.
Many, but certainly not all, of the FERC-approved pipelines that have triggered such opposition from environmentalists hinge upon the interstate transfer of natural gas, which is increasingly critical to our economy and is, all told, a net-positive for the country. After all, natural gas is a much-cleaner resource than coal and is impressively abundant and cheap. Indeed, this is precisely why it is in such strong demand around the globe, leading to the boom in U.S. LNG exports.
I am a big fan of solar, wind, biogas and other forms of alternative energy. At the same time, however, it is important to recognize that a diverse energy portfolio is the best approach for the country, in terms of jobs, economic growth, affordability and grid-stability. To be sure, ramping up LNG exports depends on smart and effective regulation of interstate energy transfer. But even those states seeking to move away from fossil fuels as quickly as possible cannot do so without a well regulated and integrated system. We are all in this together.
In the modern energy economy, bottlenecks are a false choice. We need an active FERC that will catalyze the growth and evolution of the U.S. energy sector. I, for one, am heartened that FERC appears to be headed toward wholeness.