FERC reasserted its independence and kept to a fuel-neutral path when it voted unanimously last week to reject a controversial notice of proposed rulemaking (NOPR) by the Department of Energy (DOE) to change the nation's grid reliability and resilience policies, according to Commissioners Neil Chatterjee and Cheryl LaFleur.
"There was a lot of frenzy in the press about this 'changing FERC' and so forth, and I was very happy that we were able to come together on a consensus order, and then put our differing thoughts in separate statements and move forward," LaFleur said Tuesday morning. "It felt like a very FERC-like day."
At a panel discussion hosted by the Bipartisan Policy Center (BPC) in Washington, DC, the two former Federal Energy Regulatory Commission chairman, both still commissioners -- Chatterjee, a Republican, and LaFleur, a Democrat -- provided some insight into the Commission's NOPR decision-making process.
When DOE Secretary Rick Perry submitted the NOPR in September, Chatterjee had been chairman for less than two months and there were only three commissioners; by last week's vote, all five seats on the panel were filled and Kevin McIntyre had been sworn in as chairman.
Chatterjee said that while he initially expressed "some sympathy" for Perry's proposal, he was convinced to vote against it during FERC's review of the NOPR.
"We do things in a cautious, steady, legally defensible manner,” he said. “As we built the record, went through the record and did the analysis, I came to the conclusion that my colleagues did, which is that while I feel Secretary Perry asked the right question, he proposed the wrong remedy, and that the remedy that was proposed in the NOPR did not meet the legal test that the Commission would have posed in that analysis."
In the end, FERC rejected DOE's NOPR, and instead issued a separate order "to holistically examine the resilience of the bulk power system."
LaFleur said the NOPR prompted commissioners to ask two questions, and they came to unanimous agreement on them both: "A resilience issue had not been demonstrated in that docket, and the proposal was not just and reasonable," she said.
"What was interesting is that the Commission was changing membership as this was going on, just to add a little twist, and by the time we actually issued it we had five members. I was very happy that we were able to come together. I think Chairman McIntyre brought us together on the consensus order and then where we had separate things to say that were important to us, we said them separately."
LaFleur and Chatterjee wouldn't speculate on the kind of responses regional transmission organizations (RTO) will give in response to the FERC order. But "because of the intense focus on this, we're likely to get a lot of thoughtful replies and comments, and we'll have what I hope to be a thorough, robust record to review and to make a determination on how best -- or if we should -- move forward," Chatterjee said.
"One of the things that I thought was difficult about the NOPR as it was proposed was the focus on 90-day fuel supply, and it seemed to indicate a predisposition to favor particular fuel sources," Chatterjee said. "What I hope to see in the record we develop and the analysis we do going forward is that we approach it in a fuel neutral way…
“My sense of this is that you're going to see different challenges in different regions. There's just different variables and different factors at play, and I leave it to the experts in the RTOs and the ISOs [independent system operators] to identify where their challenges are and what the plausible paths forward may be."
"It's up to the Secretary whether he proposes more ideas like this, and it's his prerogative," LaFleur said of Perry. "What's important to me, though, is that whatever gets proposed -- whether it's a complaint from a market participant, or something that comes from the administration -- we act as an independent agency and look at it based on the facts and the law that we're sworn to administer. And I think that's what we did in this case. I think administrations have of course had an influence on FERC policy, and they've done so primarily through who they put on the Commission, which is how independent agencies work."
Chatterjee said he appreciated Perry's approach, which he said had put intense focus on grid resilience and reliability. "This isn't the first time that forces outside the Commission have tried to influence Commission policy...You've seen administrations in the past try and influence independent agencies. I thought what we showed...is we demonstrated our independence, and that we will continue to do things -- whether there's outside efforts to influence the Commission or not -- we will continue to do things in a fact-based, evidence-based way."
Perry and other DOE officials showed respect for FERC's process, and there has been no indication that they intend to take further action on the NOPR, Chatterjee said. "They will respect our process and allow this new proceeding that we have commenced to move forward."