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Glick’s FERC seen focusing on transmission, MOPR, environmental justice

22 January 2021 Jeff Beattie

President Joe Biden appointed Richard Glick as chairman of the US Federal Energy Regulatory Commission, a change expected to focus the agency on key priorities of the administration and green groups to expand transmission to serve renewables and eliminate Republican wholesale power market policies seen by critics as disadvantag­ing clean energy plants backed by states.

A near-term target for Glick is likely to be the "minimum-offer price rule" (MOPR) imposed by the previously Republican-led FERC in the capacity market run by PJM Interconnection, which operates the grid serving all or parts of 13 Mid-Atlantic and Midwest states.

Although FERC's Republican majority said the expanded price floors were justified to prevent subsidized renewables and nuclear plants from making bids that suppress prices in PJM's capacity market, Glick and FERC's other Democratic member, Allison Clements, plus clean energy advocates charge it improperly undercuts state efforts to increase renewables and decarbonize their grids.

With MOPR critics already having sued to overturn FERC's action in the US Court of Appeals for the District of Columbia Circuit, some legal observers suggest a Glick-led FERC might quickly move against the price floors by asking the court to remand the matter to the commission for review.

That was the same approach taken by the Environmental Protection Agency under the Trump administration to scotch President Barack Obama's Clean Power Plan, which was aimed at stripping carbon emis­sions from the US generation fleet.

However, FERC would appear unlikely to take any action that would hamper PJM's next capacity auction, which already has been sig­nificantly delayed by policy disputes.

The commission under Glick also is expected to prioritize transmission policy reforms designed to encourage long-haul power lines of the type that have not been built in recent years despite FERC's Order 1000, the 2012 rule designed to accomplish that by compelling new regional and interregional planning processes and project cost-allocation systems.

However, that is a tricky goal because, unlike with pipelines, FERC does not have authority to site power lines across states that object, a problem that has routinely sunk larger projects. States and consumer groups are also wary of expensive transmis­sion buildout because the costs wind up on ratepayers' electric bills.

Order 1000

A Democratic FERC could neverthe­less encourage long-haul transmission by changing Order 1000 to encourage or compel more inter-regional planning of transmis­sion, which many experts say has not been effectively pursued by FERC-jurisdictional regional transmission organizations (RTO) and independent system operators (ISO). Glick has said publicly it is probably time to review Order 1000, and that more inter-regional transmission planning is needed.

FERC also could encourage RTOs and ISOs to credit proposed transmission projects with providing more types of benefits in cost-benefit calculations, making it more likely the projects will be approved in their regional transmission expansion plans.

Typically, RTOs assign benefits based on more efficient dispatch of low-cost power enabled by the proposed lines, and in some cases to reduction of grid congestion. How­ever, FERC could encourage grid operators to give more weight to new lines that serve state "public policy" goals, such as initiatives to expand clean energy.

Glick also has called out what he calls a "per­verse incentive" in Order 1000 that encour­ages incumbent utilities to build shorter power lines designed to fix reliability prob­lems rather than long-haul lines of the type Democrats and green groups believe are needed to cost-effectively bring power from remote renewable energy facilities to urban load centers.

Under Order 1000, projects aimed at meeting public policy goals must be put out for bid in often contentious competition proceedings, but some projects designed to fix reliability problems are automatically assigned to incumbent utilities.

Rather than take on longer, potentially controversial transmission projects, utili­ties are getting RTOs and ISOs to approve smaller projects that can go into service quickly and start producing returns, Glick has suggested. At an October 2019 conference, Glick said Order 1000 should be reviewed to remove that incentive, whether that means scrapping competition require­ments in Order 1000 or expanding them.

A Democratic-controlled FERC also is likely to consider reforms to speed intercon­nection of renewables to the grid. Currently, hundreds of gigawatts of wind and solar capacity in the Midwest and West are in long queues awaiting grid hook-ups, a process slowed by complex studies assessing the impacts of each individual hookup.

FERC is under pressure to act on that issue from renewable generation developers and green groups such as Americans for a Clean Energy Grid, a coalition encouraging expansion and modernization of the North American high-voltage grid.

In a January 11 report, the group called the current interconnection process broken and urged FERC to take a more "proactive" approach to improving regional and interregional transmission planning to better incorporate future generation additions and retirement. The group also urged FERC to end "participant funding," in which generators pay for system upgrades needed for interconnection. Instead, FERC should spread costs to all beneficiaries of the new interconnection, it said.

The same group is planning to release a report on how FERC can best "spur more cost-effective transmission infra­structure." A notable list of former FERC members is scheduled to speak at a webinar accompanying the release, including former FERC chairs Norman Bay, Jon Wellinghoff, Joe Kelliher, Pat Wood, and Elizabeth Moler as well as former FERC commissioners Nora Brownell and Phil Moeller.

Other actions?

As for other possible coming action at FERC, a Democratic-controlled commission might be inclined to examine RTO gover­nance, with some stakeholders arguing incumbent utilities have outsized control over grid operators' processes for reviewing tariff changes and other initiatives.

Additionally, merchant developers of new transmission projects say incumbent utili­ties have thwarted their ability to win new power line projects in PJM and elsewhere, despite Order 1000 requirements that most large new projects be competitively bid on a level playing field.

On the subject, Glick told a House of Representatives sub­committee in June 2019: "One of the things that has been very enlightening since I have been at the commission…is just the amount of frustration that there is with RTO gover­nance just around the country. And it is not just consumer groups—it is other stakehold­ers as well that have been very frustrated with it. And I think that it's worth it for the commission to take a look at…."

However, legal sources say it is not clear how much authority FERC has to dictate how RTOs and ISOs run themselves, and in related matters the commission has trod carefully in the past.

The Democratic-run FERC likely will elevate the issue of environmental justice, which both Democratic commis­sioners and Republican Commissioner Neil Chat­terjee cited in voting down two natural gas pipeline compressor projects at FERC's 19 January open meeting.

President Biden has pledged to review issues surrounding implementation of the National Environmental Policy Act and roll back certain changes enacted by President Trump, and is expected to elevate the impor­tance of environmental justice in impact analyses required by the law, which could give FERC more leverage to act on the issue.

However, Glick and Clements may have to wait months to fully move on their agenda. That is because FERC remains weighted 3-2 in favor of Republicans and, barring a surprise early departure by a GOP commis­sioner, Biden will not have a chance to name a third Democrat until 31 June, the end of Chatterjee's current term. Under FERC rules, Chatterjee could also stay on until Congress adjourns in December if he chose to.

Green groups applauded Glick's promo­tion Thursday, with the Natural Resources Defense Council saying he will bring the commission a "fresh start."

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