On November 16, 2021, the Senate confirmed D.C. Public Service Commission (DCPSC) Chairman Willie Phillips to fill the Federal Energy Regulatory Commission's (FERC) empty fifth seat. Commissioner Phillips was sworn in to office on December 3, 2021.
His addition will restore FERC to a full complement of five commissioners. Notably, Commissioner Phillips' swearing in also establishes a Democratic majority at FERC for the first time since 2017, which is a significant milestone as FERC is expected to be a key element in the Biden administration's efforts to address the challenges of climate change.
In his Senate confirmation hearing, Commissioner Phillips emphasized the need for a balanced approach to regulatory decision making and highlighted reliability, affordability, and sustainability as the three primary goals of a utility commission. Commissioner Phillips also committed to prioritizing public engagement, equity, and environmental justice—all of which have been identified as areas of increased focus at FERC under the Biden Administration.
In addition to advancing these broader areas of emphasis on the part of FERC, Commissioner Phillips may have the opportunity to cast the tiebreaking vote in several pending hot-button proceedings. FERC has faced a deadlock over the past few months, but the addition of Commissioner Phillips breaks the 2-2 tie between Democrats and Republicans on the Commission and provides the Democrats, including Commissioner Allison Clements and Chairman Richard Glick, with a 3-2 majority.
The previous deadlock allowed several recent important proposals to go into effect by operation of law under statutory rules applicable when FERC cannot muster a majority to act on pending filings. These proposals include PJM Interconnection's (PJM) proposed Minimum Offer Price Rule (MOPR) replacement, which overhauls pricing rules in PJM's capacity market, and the creation of the Southeast Energy Exchange Market, a new wholesale market proposed by a cohort of Southeastern electric utilities.
Numerous parties have already filed requests for rehearing in both proceedings, and Commissioner Phillips will need to hit the ground running in order to weigh in. It also remains to be seen whether Commissioner Phillips' role as chairman of the DCPSC will pose any recusal issues, particularly in the PJM MOPR proceeding where DCPSC filed comments in support of PJM's proposal.
Commissioner Phillips may also be an instrumental vote in other pending proceedings before FERC, including rulemakings with major implications for electric transmission infrastructure, a potential overhaul of the agency's policy on natural gas pipeline certificates, and a review of various aspects of reactive power capability compensation.
With regard to transmission, he joins the Commission as parties prepare to file reply comments in response to FERC's Advance Notice of Proposed Rulemaking that sought public comment on a number of potential reforms to improve the electric regional transmission planning and cost allocation and generator interconnection processes. At the same time, the industry awaits next steps on FERC's March 20, 2020, Notice of Proposed Rulemaking and an April 15, 2021, Supplemental Notice of Proposed Rulemaking, which contemplates an overhaul of FERC's transmission rate incentive policy and proposes limitations to the return on equity (ROE) adder for participation in an Independent System Operator or Regional Transmission Organization.
Meanwhile, FERC's review of its Certificate Policy Statement, which governs its consideration of applications for certification of new natural gas facilities, remains ongoing following the early 2021 issuance of a Notice of Inquiry (NOI) seeking "new information and additional stakeholder perspectives." Notably, the NOI invited comments regarding the agency's consideration of environmental justice concerns, a stated area of importance for Commissioner Phillips.
And at its November 18, 2021, meeting, FERC added yet another docket of interest, issuing an NOI seeking comment on the reactive power capability compensation methodology approved in Opinion No. 440, potential alternative methodologies, and compensation through transmission rates for resources that interconnect at the distribution level.
Commissioner Phillips' confirmation empowers FERC to act on a broad swath of impactful policies with implications for all sectors of the energy industry. The energy team at DWT actively tracks developments related to the industry's rapidly evolving regulatory framework, including at FERC. Questions can be directed to any member of DWT's energy practice group.