On December 20, 2018, the Federal Energy Regulatory Commission (Commission) held its December 2018 open meeting. This was the first meeting for Commissioner Bernard McNamee, who was confirmed by the Senate on December 6, 2018. Given his recent confirmation, Commissioner McNamee voted present on the consent agenda. Commissioner McIntyre was absent due to continuing health issues and did not vote on the consent agenda.
Highlights of the meeting included:
- NOPR Concerning Horizontal Market Power Analysis Requirements – The Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to modify horizontal market power analysis for certain ISO/RTO markets. Specifically, the Commission proposes to relieve market-based rate sellers (i.e., sellers seeking to obtain or retain authorization to make market-based sales) of the requirement to submit indicative screens for ISO/RTO markets with ISO/RTO-administered energy, ancillary services and capacity markets subject to Commission-approved monitoring and mitigation. In markets without an ISO/RTO-administered capacity market subject to Commission-approved ISO/RTO monitoring and mitigation, market-based rate sellers still would be required to submit indicative screens for authorization to make capacity sales. Finally, the Commission proposes to eliminate the rebuttable presumption that Commission-approved ISO/RTO market monitoring and mitigation is sufficient to address any horizontal market power concerns regarding sales of capacity in ISO/RTOs that do not have an ISO/RTO-administered capacity market. Comments on the NOPR are due within 45 days of its publication in the Federal Register. Chairman Chatterjee stated that removing the need to file indicative screens will reduce regulatory burdens without diminishing protections for ratepayers. Commissioner Glick stated that the proposed rule highlights the essential role that robust market mitigation plays and indicated that the Commission should consider whether additional measures can be adopted for added protections against market power.
- In his opening comments, Chairman Chatterjee drew attention to the Commission’s achievements in the past year, noting the Commission’s approval of 48 pipeline projects and four storage projects, and its issuance of more than 1,000 orders. Among other things, Chairman Chatterjee highlighted the following Commission actions:
- Establishing the final rule on electric storage resource participation in regional markets
- Addressing the Tax Cut and Job Act reforms
- Signing a memorandum of understanding with the Pipeline and Hazardous Materials Safety Administration (PHMSA) to coordinate LNG reviews
- Issuing environmental schedules for 12 LNG applications
- Reaching a consensus on a path forward as to whether and how to address grid resilience
- Establishing new supply chain related reliability standards
- Resolving the DC Circuit remand in the Emera Maine proceeding
- Issuing final rules to improve regional market transparency and streamline interconnection processes, and
- Issuing a final rule requiring expanded cybersecurity incident reporting.
- Chairman Chatterjee also highlighted a recent report issued by the United States Government Accountability Office (GAO) titled Critical Infrastructure Protection: Actions Needed to Address Significant Weaknesses in TSA’s Pipeline Security Program Management. Chairman Chatterjee noted that, while the Commission has the authority to issue certificates for new natural gas pipelines and to set their rates, it is the responsibility of the Department of Homeland Security’s Transportation Security Administration’s (TSA) to regulate pipeline security. On December 19, the GAO released its report recommending changes to strengthen TSA’s gas pipeline security requirements. Chairman Chatterjee noted that the GAO report reiterated issues previously raised by him and Commissioner Glick in an op-ed, and that he was pleased with recent efforts to improve pipeline security. Commissioner Glick also commented on the report, questioning whether the TSA should be the entity overseeing pipeline security and arguing that Congress should consider moving pipeline security over to another agency, such as the Department of Energy.
- Commissioner LaFleur addressed NERC’s Generation Retirement Scenario Special Reliability Assessment issued on December 18, 2018. She expressed her concerns regarding the analysis and conclusions in the report. Specifically, she believes that there is a fundamental flaw in the assumptions—an asymmetry that assumes accelerated retirement of baseload beyond that currently announced or anticipated, but considers only announced new resources. She urged reliance on facts and not projections.
- Commissioner LaFleur also referenced the removal from the consent agenda of the proposed certificate for the Calcasieu Pass LNG export project, indicating that she was prepared to vote on the project. More generally, she indicated that she is open to approving infrastructure projects in the public interest. She noted that the Commission’s LNG responsibilities are different than its responsibilities for pipelines. Specifically, she noted that the Commission only authorizes the LNG facilities, not the export of the product itself, with implications for the scope of the environmental review. She indicated that she believes reasonable approaches exist to finding common ground. Finally, she noted that she is ready to vote on the Calcasieu Pass project and will consider the record at the time it comes before the Commission for a vote.
- Commissioner Glick noted the recent release of the latest version of the National Climate Assessment. He reiterated his arguments that the Natural Gas Act requires the Commission to consider a natural gas pipeline project’s or LNG facility’s potential impact on climate change and argued that the Commission’s failure to take this into account is creating greater legal risk for the projects it approves.
- Finally, Commissioner McNamee indicated in his first meeting that the key thing he wants to do at FERC is listen.