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FERC's LaFleur, A Competitive Markets Fan, Hoping DOE’s NOPR Proposal Draws Public Comments

FERC Commissioner Cheryl LaFleur said this week she hopes the Commission receives many public comments over a Department of Energy (DOE) proposal to provide reliability and resiliency compensation to coal and nuclear baseload generators, on the grounds that "a lot of people will be affected by this."

In her first public appearance since the DOE unveiled the proposal, LaFleur told attendees of the North American Gas Forum in Washington, DC, on Tuesday that the Federal Energy Regulatory Commission has also noticed increased opposition to interstate pipelines at the state level, and that several states have offered -- or are considering -- subsidies for coal and nuclear power.

"When I look at a proposal, there's really three things I'm looking for: that there's an attribute that's needed to keep the lights on for customers; that it can be defined in a fuel-neutral way; and that it can be validly and transparently priced by the market," she said.

According to the commissioner, over the past seven years there have been "numerous examples of attributes where markets changed their rules." She cited FERC's order in September 2016 approving a request by the California Independent System Operator to revise its tariffs to include a "flexible ramping" product. Another example, she said, is the June 2015 order approving PJM Interconnection's capacity performance proposal, which was made in response to the polar vortex event in January 2014.

"In each of those cases, the market design started with an attribute, figured out why it was needed, and then used the market to price it," LaFleur said. She added that there was skepticism surrounding "ideas that start with the resource, then try to save it and come up with the attribute."

Commenting on DOE's most recent proposal, LaFleur said, "I hope we get a lot of comments. I think we will. I'd like them to be focused on this proposal. We don't have to cover the whole landscape of everything in markets in 20 days. We already have a huge record of thousands of pages of comments on related issues in our price formation dockets."

Currently the only Democrat serving on FERC, LaFleur described herself as "an unapologetic supporter of competitive markets." She said natural gas, because of its increased use for power generation, has had a big impact on those markets, but it also "works very well with wind and solar, and the prices of those technologies have also come down considerably and they're seeing much more critical mass in the markets."

That said, LaFleur said she and her Republican colleagues have noticed that "many resources -- especially some, but not all -- nuclear and coal units, are struggling a bit in the competitive markets because of the low marginal energy prices." To remedy this, several states -- including Connecticut, Illinois, New Jersey, New York and Ohio -- are either considering or have already extended subsidies to coal and nuclear plant operators in order to avoid losing jobs and tax revenue. Nuclear power is also attractive to states because of its carbon-free attributes, she said.

"This is something that FERC has been very focused on," LaFleur said, adding "I support the regional effort to carefully design market structures to accommodate state issues."

FERC has seen increased opposition to natural gas pipelines at the state level, she said. "Things are heating up...We are seeing state opposition to pipelines playing out, particularly in the consideration of certifications under Section 401 of the Clean Water Act [CWA], mostly for crossing waterways. There have been some high-profile recent examples of states denying 401 applications for pipelines for various reasons."

She cited FERC's decision last month to issue an order that regulators with the New York Department of Environmental Conservation (DEC) had waived their authority to issue a water quality certification for Millennium Pipeline Co. LLC's Valley Lateral Project, because the DEC didn't act within CWA’s required one-year timeframe.

"There continues to be a growing view” by Congress and the Trump administration to finding ways that “we can make the permitting process faster and easier," LaFleur said. "There have been a number of executive orders and legislative proposals.

"I support ways to streamline and expedite our process, as long as we are consistent with our legal and environmental responsibilities, and our authority and comfortability are aligned. We will actively comment on those things when they come out."

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