On the day after his inauguration, President Biden designated Commissioner Richard Glick as the new Chairman of the Federal Energy Regulatory Commission (FERC). Chairman Glick, a Democrat, joined FERC in 2017, bringing decades of experience in the electric utility industry. While Republicans controlled FERC during the Trump years, he was often the lone voice of dissent. So now that he's setting the agenda for the Commission, what can we expect?
He gave some huge clues in his 2019 Energy Law Journal article, "FERC and Climate Change." What seemed like insightful musings now looks like a roadmap in light of Glick's remarks about where FERC is headed at a recent energy conference. There, he first referenced the article and then outlined an agenda for FERC that closely tracks it.
FERC's Broad Jurisdiction and Authority Mean Glick's Agenda Has Teeth
Glick's focus on climate change is important for at least two reasons.
First, FERC has very broad jurisdiction over the nation's energy sector, a major source of greenhouse gas (GHG) emissions. FERC oversees the sale and transmission of wholesale electricity, the transportation of oil and natural gas, and the permitting of several key types of energy infrastructure, including interstate natural gas pipelines and hydroelectric facilities. Moreover, the electricity sector has a potentially enormous role in decarbonizing other sectors of the economy, primarily transportation and buildings.
Second, existing law gives FERC plenty of authority to address climate change, thanks to Congress's use of broad phrases like "just and reasonable and not unduly discriminatory or preferential," and "the public interest" found in the Federal Power Act (FPA) and the Natural Gas Act (NGA). Thus, FERC is in a much stronger position than the EPA, which has been ensnared in years of litigation over the extent of its existing authority while it waits for a gridlocked Congress to provide additional authority.
As Glick's article points out, FERC has long used its authority to advance three principles that now have an indirect but important impact on efforts to reduce GHGs:
- (a) Ensuring a level playing field;
- (b) Enhancing competition; and
- (c) Promoting cooperative federalism.
In applying the first two principles, FERC regulation has the effect of promoting the deployment of new, clean technologies—notably wind, solar, demand response, and energy storage. In particular, market rules designed for large, fully-dispatchable powerplants pose unintended barriers to variable energy resources and the storage facilities that will help integrate them, and Glick intends to reduce those barriers. Glick says the same for distributed energy resources (DERs), which he thinks may be the largest category of emerging technologies.
In FERC-world, cooperative federalism—Glick's third key principle—means leaving states free to regulate generating facilities, as required by section 201(b) of the FPA. States may choose either dirtier or cleaner generation, but the recent trend strongly favors the latter, with a growing number of states aiming for a zero-carbon electricity portfolio within the 2035-2050 timeframe.1
These state policy goals are being supported by an enormous corporate demand for renewable power, and from a growing number of utilities. Glick makes clear that FERC "must resist the invitation to interfere with those state policies."
What's Next? Glick's Four Priorities
With his article as background, Glick's conference presentation spelled out four of his top priorities as Chair.
First: Keep breaking down barriers to new technologies.
Building on recent Commission orders facilitating energy storage and DERs, Glick will look to eliminate barriers to other technologies, such as hybrid facilities (e.g., wind or solar combined with storage) and offshore wind.
Second: Improve incentives for transmission investment.
Glick noted that expanding transmission is the key to integrating more renewables—particularly because the best renewable resources tend to be located far from major load centers.
Third: Reform the interconnection process.
New generation facilities face longer and longer queues to connect to the transmission system. This problem particularly concerns Glick because much of the generation waiting in those queues uses new, cleaner technology. The longer the queues to interconnect clean, new plants, the longer dirty, expensive old ones keep running.
Finally: Reduce the tension between FERC and states with clean energy policies.
Glick sees room for improvement across the country. In the East, states with clean energy policies are concerned that their support for new technologies is being undercut by disadvantages in the competitive wholesale markets FERC regulates. In the West, he sees this tension as a potential impediment to the ongoing progress toward establishing organized electricity markets beyond California.
In terms of timing, FERC currently consists of two Democrats and three Republicans, but that will change when former Chair Neil Chatterjee's term expires on June 30. Once President Biden (with Senate confirmation) fills that seat with a Democrat, Glick will have a clear majority, and will be able to begin translating his agenda into action.
In the meantime, Glick named the co-author of his 2019 article, Matthew Christiansen,2 as FERC's General Counsel, and has created a new, senior position to better integrate environmental justice and equity concerns into the Commission's decision-making processes.
All of this means that FERC is going to be a major player in the efforts to address climate change for at least the next four years.3 DWT's energy and climate change lawyers will continue to track these developments, and we invite your feedback and inquiries.
1 See Legal Pathways to Deep Decarbonization, Model State Legislation to Decarbonize the Generation of Electricity.
2 For a very recent article co-authored by Mr. Christiansen on the subject of FERC's role in moving toward a cleaner electricity grid, see "Long Live the Federal Power Act's Bright Line," 134 Harv. L. Rev. 1360 (2021).
3 Although Chairman Glick's term expires on June 30, 2022, he will presumably be nominated and confirmed to a second term.