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LaFleur Says Top Priorities at FERC Unchanged Despite Lack of Quorum

Acting FERC Chairman Cheryl LaFleur said her top regulatory priorities remain unchanged despite the Commission's lack of a quorum. But in the interim the health of wholesale competitive markets needs to be addressed and pipeline foes need to find a more appropriate venue to express their views, she said.

Speaking at the National Association of Regulatory Utility Commissioners (NARUC) Winter Committee Meetings in Washington, DC, on Tuesday, LaFleur added that she didn't have any beef with the Environmental Protection Agency (EPA), which took the Federal Energy Regulatory Commission to task last fall over disagreements over climate change and greenhouse gas emissions.

LaFleur told NARUC President Robert Powelson that her top three priorities at FERC remain reliability in grid security, transmission, and building a clean and diverse energy mix.

"Over the last several years, a lot of our work has been driven by changes in the resource mix," LaFleur said. "The buildout of natural gas pipeline systems and the use of gas for [power] generation, all of the renewables, storage and demand-side resources are shaping a lot of our work, both on market rules and on infrastructure."

Last month, then-chairmanNorman Bay announced his resignation from the Commission and President Trump named LaFleur to serve as acting chairman.A flurry of activity took place before Bay's last day on Feb. 3, but several major natural gas pipeline projectsdid not win last-minute approval.

"The first thing we did when we realized we would be losing a quorum is we confirmed that all the existing delegations and all of the existing work of staff that is done under existing delegated authority could move forward," LaFleur said. "That means the environmental review of projects, the audits, the investigations, the 5,000 delegated orders a year, and uncontested cases or smaller cases that the staff does...

"I do plan to stay on the Commission afterward, so I'll be able to continue to help push my priorities with my new colleagues and, hopefully, my existing colleague Colette [Honorable]."

LaFleur said she hoped that during the period without a quorum, FERC could make progress over how wholesale competitive markets can adjust or re-adapt to various state initiatives to choose resources.

"We have a situation where, in big parts of the country, the vertically-integrated companies were disaggregated and the emerging generation needs an investment signal to keep the lights on in the markets," LaFleur said. "We have a lot of states, for various reasons, in action policies to specifically choose resources, and there are several cases pending that raise those issues.

"While we can't issue orders in those cases, one thing that Colette and I have talked about that we can do is to organize a staff-led tech conference -- to bring people in before us, build a record, and hear from the states, the environmental community, generators and ISOs [independent system operators] to try to discuss some of those issues."

Dockets not the place for 'larger issues'

When Powelson asked LaFleur how FERC was handling a "rogue attack by the environmental community to site pipelines," she replied that the Commission was required, under the National Environmental Policy Act, to make sure there is a need for the pipelines and that they would be built in an environmentally responsible way.

"But in some cases our dockets are being used as a place to discuss larger issues, [such as] should we extract gas at all, and how should we handle climate change," LaFleur said. "That's a difficult forum to have that discussion. We are trying to take seriously all of the comments we have in the docket, but I think that people who want to stop [hydraulic fracturing]...we don't regulate that, and there are places where they should be having their voices heard."

She added that she was amazed at the rise in demand for liquefied natural gas (LNG) exports.

"LNG has been an important import commodity that helped keep people warm in the winter, [and] it's still being imported up in Boston," LaFleur said. "But now what we're seeing is that with the growth of affordable and abundant domestic natural gas, people in other parts of the world are looking to buy U.S. gas. And there we have split authority with the DOE [Department of Energy]. They oversee the actual export of the product, but we oversee the regulation and construction of the export facilities."

Thoughts on PURPA and CPP

Powelson asked LaFleur if it was time for Congress to modernize the Public Utilities Regulatory Policies Act (PURPA) of 1978, and for her thoughts on the status of the EPA's proposed Clean Power Plan (CPP).

"One thing we're very mindful of as we administer PURPA at FERC is, as recently as 2005, Congress reopened PURPA and made changes...in the competitive market regions, but left it in place in the other regions of the country. A lot of the people who come before us [say they want] changes to PURPA, [and] we say those are really legislative changes.

"There are a lot of drivers right now -- renewable generation, incredibly improved economics, other environmental requirements like the renewable portfolio standards, tax credits, and so forth -- and there will probably be a time when Congress can look at PURPA again and see if they want to make any changes. It's no longer the dominant driver, but we did hear at [a recent conference] that it is still a driver for some projects. But there are a lot of other drivers as well."

As for the CPP, she said a memorandum of understanding with EPA and DOE over the plan remains in place,but last year's stay by the U.S. Supreme Court has temporarily blocked its implementation until all legal challenges have been resolved. Meanwhile, the U.S. Court of Appeals for the District of Columbia Circuit has yet to issue a ruling ina lawsuit filed by West Virginia and at least 27 other states over the CPP.

"One of these weeks, [the D.C. Circuit Court] is going to put out an order on the CPP," LaFleur said. "If it's upheld, then we'll be looking to the new administration to make any proposals for change that they make and put them through the regulatory process. It seems they're going to make a change, but I'm not privy to what it is."

No issue with EPA

Although the EPA said last fall that it was not satisfied with FERC's environmental impact statements for a pair of pipeline projects, LaFleur said she didn't have a problem with her counterparts at the agency.

"We all have independent authority," she said. "In some cases, the regional offices of the EPA have intervened in our dockets and pushed us on certain environmental protections and how we do our environmental review. They're doing it the way you're supposed to do it: in the docket. They're not walking up and down 1st Street with signs; they're coming into the docket and pushing us to do what they think is better. They're environmental regulators, and I respect that.

"I would imagine that we'll see some sort of changes in emphasis at the EPA, but they'll still be environmental regulators and we'll still be energy regulators, and we'll still have that discourse or tension because we're looking at the prism through different faces. We're looking at reliability, safety...and they're looking at the species. Not that we don't do that, too, but they're strictly environmental regulators. That's their jobs."

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