Only a few years ago, the federal agency that regulates the transmission of electricity, gas and other energy matters was looking into ways to prop up coal, in line with former President Donald Trump’s fossil fuel agenda.
But Biden administration appointments to the Federal Energy Regulatory Commission (FERC) have tipped the power balance of the commission, and it now is poised to hasten a clean energy transition.
If it takes on the challenge, the commission could help solve one of the biggest problems facing the developers of renewable energy: long waits while grid operators study whether their solar or wind farm can be connected to the nation’s electric grid safely and without causing blackouts.
Just last week, the nation’s largest grid operator, PJM Interconnection, told Inside Climate News about plans to put reviews of as many as 1,250 energy projects, most of them solar, on hold for two years to deal with an overwhelming backlog. PJM manages the grid in all or part of 13 states, from Virginia to Illinois.
In the short-term, FERC will have the final say on what PJM can do with its energy project connection queue. But a remade commission, with two commissioners appointed by President Joe Biden, now leans in favor of Democrats, who are making no bones about how the commission should look into ways it can respond over the long-term to booming demand for renewable energy across the country.
Last summer, the commission opened a process that could lead to major rule changes, asking market participants to comment on what’s working and what’s not working, in the context of an energy transition that is already underway but is experiencing choke points and speed bumps across the country.
The commission has received nearly 400 responses, with some electric utilities and grid operators raising cautionary flags about shifting too quickly and risking grid reliability.
But the fact that the commission has signaled it is rethinking the whole way electricity gets onto the nation’s grid and into homes and businesses is buoying the hopes of clean energy advocates and some members of Congress. They see FERC as in a position to help determine the success of the Biden administration’s climate policies, particularly its goal of a carbon-free grid by 2035.
“FERC, as I have said many times, is the single most important agency for climate, bar none,” said Rep. Sean Casten, an Illinois Democrat who has been trying to raise the public profile of the often-overlooked agency by launching last year’s “Hot FERC Summer” campaign, playing off a hit song by Fergie and using terms like “FERCalicious” to describe climate progress.
“Every single policy we have to meaningfully reduce carbon dioxide,” Casten said, involves efforts such as electrifying cars, home heating and industrial processes, and “decarbonizing our electric fleet” of power plants by shedding fossil fuels. As the nation expands its electricity generation, it will need new clean-energy power plants, a more robust transmission grid and well functioning wholesale electricity markets, he said, adding, “Those things are all FERC jurisdictional.”
A More Efficient Process
PJM operates a power system of more than 84,000 miles of transmission lines, tapping into 180,086 megawatts of electricity generation serving more than 65 million people. Its members include big utilities that own the power lines and power plants, and independent power producers lined up to meet renewable energy demands, fueled by state policies and businesses with aggressive clean energy commitments.
PJM has proposed a more efficient process for handling requests for connections to the grid it manages.
But getting there will be painful for some businesses.
PJM has proposed a two-year pause on reviewing some 1,250 of 2,500 energy projects already in its queue, most of them solar, and deferring the review of new projects until the fourth quarter of 2025, with final decisions on those coming as late as the end of 2027.
“There is broad national consensus, in the leadership from the public and the private sector, that we need to hasten the adoption of renewable energy,” Adam Edelen, a former Kentucky state auditor who runs a company working to bring solar projects and jobs to ailing coal communities in Appalachia, told Inside Climate News. “The planet does not have time for a delay.”
But experts like Tom Rutigliano, a senior advocate with the Natural Resources Defense Council (NRDC), say that PJM, operating within an existing regulatory structure, is making the best of a bad situation by trying to more effectively manage its workload.
“The queue problem at PJM is like a symptom of some of the bigger problems” that FERC is trying to address, he said.
“What PJM has come out with is sort of about figuring out who gets in the lifeboats. But we still need to make sure the ship can get where it’s going,” and that is where FERC’s process aimed at developing new regulations comes in, he said.
“We hope they will come out with rules that set more ambitious standards for what transmission planning looks like,” including planning ahead for 10 to 15 years, he added.
In written comments, the Sustainable FERC Project, which represents several environmental or public interest groups, including NRDC, Sierra Club and the Southern Environmental Law Center, told FERC that the way the agency assigns costs associated with grid connections and other rules for energy projects seeking to connect to the grid unfairly makes new renewable projects pay for upgrades that benefit the entire system. The environmental groups called these policies “unjust, unreasonable, and unduly discriminatory.”
A decade-old FERC rule, intended to spur inter-regional transmission projects—for example, wind farms in the West serving utility customers in the East—has also been criticized, termed a failure by the Sustainable FERC Project.
Taken together, FERC’s policies, the critics say, favor the status quo over the kind of change that climate advocates say is not only necessary but is already underway.
“There is a lot they can do,” said Gizelle Wray, senior director of regulatory affairs and counsel for the Solar Energy Industries Association, a trade group, referring to FERC.
“They can foster a more efficient regulatory framework for the industry to meet this evolving (energy) landscape,” she said. “But it is a matter of whether they have the will to do it and the time to do it.”
‘We Are Going to Have to Build a Lot of Stuff’
The long queues of projects awaiting a green light from PJM or other grid operators can be seen as good news, showing a strong interest in renewable energy, said Ari Peskoe, the director of the Electricity Law Initiative at the Harvard Law School.
But for new clean energy there are a number of hurdles, including local zoning and other permits, he said.
Building any kind of infrastructure is hard in the United States, Peskoe said, adding, “If we are going to transition to clean energy, we are going to have to build a lot of stuff.”
A new FERC rule to cover transmission planning, cost allocation and generator connections “is potentially a big deal,” and could help, but the outcome of the FERC process is uncertain, Peskoe said.
The commission has for about three decades been attempting to open the grid to competition, he said, but the utilities that own the transmission lines still play a large role and can “gum up the process.”
Utilities, in their comments to the commission, have said they welcome some reforms, but they also cautioned against too much change. They argue that the commission needs to keep a major focus on making sure “reliability and resiliency” remain at the forefront, an echo of the pro-coal Trump years.
Ohio-based utility AEP urged the commission to take “a balanced approach that targets reforms needed to adapt to changes in generation mix, weather patterns, and load but also maintains existing transmission planning structures and practices where they are working well.”
Utilities are already making progress in reducing their emissions, the Edison Electric Institute, a trade group for electricity utilities, told FERC.
“These reductions will continue as nearly four dozen EEI members have announced forward-looking carbon reduction goals, more than half of which include a net-zero by 2050 or earlier equivalent goal,” the institute wrote. “With the right policies and technologies, a 100-percent clean energy future can be more than a goal. It can be a reality.”
The institute argues that one way to get there is for FERC to grant utilities a first shot at building new regional transmission lines, without having to open those projects up to competitive bidding. FERC’s earlier attempts to open regional transmission construction to more competition “resulted in uncertainty, increased costs and increased delays,” EEI wrote.
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Other interests want FERC to find more ways to build competition into their regulations.
PJM, whose grid is served by only 6 percent renewable energy, urged FERC to let regional grid operators continue working on their own reforms to address the long queues of proposed energy developments, rather than issuing “prescriptive national rules.” The grid operator urged FERC to make “thoughtful, careful steps to ensure there is a reliable and resilient transmission grid that will meet the needs of a new generation as the nation continues to transition to a clean energy future while also protecting consumer interests.”
Lawmakers like Casten, in the House, and Sen. Martin Heinrich, a Democrat from New Mexico, say FERC needs help from Congress. They have proposed legislation they hope will speed reform, including removing roadblocks to regional transmission.
“We just have to grapple with the fact we have to transition really quickly,” Casten said, adding that the task will be immense, roughly doubling current electric capacity over the next decade and developing “something like $350 billion of transmission during that time period.”
The $1.2 trillion bipartisan infrastructure law passed in 2020 included $73 billion for various power infrastructure projects, from carbon capture to next generation nuclear power, as well as grid modernization. But Casten said only a small fraction in the law was for new transmission lines.
Rep. John Yarmuth, a Kentucky Democrat, and chairman of the House Budget Committee, called the energy investments in the infrastructure bill “a step in the right direction in improving and modernizing many aspects of our grid and transmission permitting process.”
But, he said, “more must be done,” and urged passage of the Democrats’ Build Back Better Act. The Act includes about $320 billion in clean energy tax incentives, but it has been stalled in the Senate, in large part because of West Virginia Sen. Joe Manchin, a Democrat, who fears that goosing the nation’s energy transition could have “catastrophic” consequences on grid reliability.
“We need to be thinking regionally, not just locally or nationally, to confront the climate crisis and make our electric grid more resilient and reliable,” said Heinrich. “Smart transmission planning offers a road map to modernizing our electric grid in a way that creates good-paying jobs and brighter, more resilient and reliable, futures.”
An Agency Susceptible to Political Winds
FERC is intended to be a bipartisan body, with no more than three of its commissioners from one political party. But its direction can sway in the political winds.
Trump’s Energy Secretary Rick Perry, the former Texas governor, tried to push FERC into rewriting regulations to favor burning coal, claiming that doing so was necessary for grid reliability. FERC rejected that plan, but during the Trump years, it issued rulings that undermined the effectiveness of state subsidies for clean energy.
In those years, the commission also took a couple of actions related to distributed energy sources like rooftop solar and energy storage and carbon pricing, that earned praise from climate and clean energy advocates. The policies had garnered support from former FERC Chairman Neil Chatterjee, previously a steadfast fossil fuel supporter, who had been an aide to Sen. Mitch McConnell (R-Ky.). Chatterjee’s move prompted Trump to replace him as commission chairman.
Under the new chairman, Richard Glick, the former general counsel for the Democrats on the Senate Energy and Natural Resources Committee, the commission has begun to evaluate gas pipeline projects’ contributions to climate change and has appointed a high level attorney to focus on environmental justice issues.
Glick told a Congressional committee last summer that “FERC is an independent agency, so we don’t necessarily take our directions from the White House, but I think we react to what’s going on in the market.”
In an interview, Commissioner Allison Clements, a Democrat with an energy industry and environmental advocacy background, said FERC “is not in the business of promoting one type of energy over another.” FERC’s job isn’t to “determine the path forward,” but rather make sure “the path being taken is cost effective and reliable.”
She described a national grid with an “enormous number of energy projects, the majority of which are wind and solar, waiting in line.”
The energy transition from fossil fuels toward renewable energy like wind and solar “requires different transmission infrastructures,” she said. “Despite the fact that wind and solar are the lowest costs and bring cost savings to customers, the grid operators by rule and tradition haven’t done enough to anticipate that demand.”
In joint written statements, Clements and Glick have raised concerns about the fairness of regulations that require some new energy developers to shoulder huge costs of grid upgrades, without the benefit of those upgrades being shared more broadly.
Clements said she is not sure what will come of all the policy suggestions the commission has solicited as part of its advanced rule-making notice, but that her hope is FERC can find ways to improve the planning and connection process to make them more efficient.
FERC policies, she said, “need to look forward and not just down, like it was always done.”
https://insideclimatenews.org/news/15022022/ferc-clean-energy-transition/ New Faces on a Vital National Commission Could Help Speed a Clean Energy Transition