Chatterjee on Trump, FERC’s reorg and climate change

By Edward Klump | 09/17/2019 07:13 AM EDT

Federal Energy Regulatory Commission Chairman Neil Chatterjee.

Federal Energy Regulatory Commission Chairman Neil Chatterjee. FERC

HOUSTON — Federal Energy Regulatory Commission Chairman Neil Chatterjee said here that a recent attack in Saudi Arabia reinforces his own calls to ensure the security of U.S. energy infrastructure from physical and cyber threats.

In an interview yesterday with E&E News, he touted potential climate upside from U.S. natural gas exports, weighed in on his relationship with President Trump and rumors about FERC’s next commissioner, and said the decision to formally do away with the Division of Energy Market Oversight was "just a better alignment of the staff."

Chatterjee, 42, is in Houston this week for the Gastech energy conference but is scheduled to be back in Washington, D.C., on Thursday to tackle a range of policy issues at the first FERC open meeting since 2018 set to feature a Republican majority.

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The former top energy aide to Senate Majority Leader Mitch McConnell (R-Ky.) has faced criticism for aligning the independent agency’s priorities with those of Trump, who drew headlines last weekend with a tweet about expediting oil pipeline permit approvals.

Chatterjee served as FERC’s chairman for several months in 2017. He was tapped to be chairman again in October 2018.

Chatterjee has rebuffed claims he is politicizing the agency (Energywire, Sept. 5). In Houston, he spoke about FERC’s agenda and the criticism that often comes his way.

Do you meet with the president from time to time on various things?

No. I mean, I’ve met him on occasion for social matters. But, again, FERC’s an independent agency. While I have relationships throughout the administration and the White House, I’ve only met the president on a handful of occasions.

So you haven’t talked to him recently about infrastructure?

Have not.

FERC now has just three commissioners. Can you say how that’s affecting your job and your ability to review energy issues or infrastructure projects?

We need a minimum of three to have a quorum. We’ve got a working quorum going forward.

I’d prefer a full complement of five, but we can get our work done with three. We’ve got an open meeting this Thursday with a robust agenda. And so I think the work of the commission will go forward in a timely basis.

We are hearing that the president may nominate FERC General Counsel James Danly to fill a vacancy on the commission.

That’s a question for the White House. Obviously, I value James and his counsel and expertise.

Until I see a formal nomination, I’m not going to comment on that.

Do you know him pretty well?

I do. We work very closely together. I [think] he’s done an outstanding job as general counsel.

Did you know him beforehand?

I did not know him beforehand. He was recommended to me when I initially was sworn into the commission as somebody who would make [an] outstanding general counsel. And I brought him on as general counsel.

If he were nominated, do you think he could move through the confirmation process quickly?

That’s a question for the Senate.

If he’s on your staff as general counsel, is there any way that you would not know if he’s about to be elevated? Wouldn’t you know that?

I’m not going to comment on it.

Until a nomination has been formally received by the United States Senate, there’s no nomination. You can’t know who’s going to be nominated until their paperwork is officially received by the United States Senate.

When do you think that we could see FERC back at four or five commissioners? Do you have any idea?

I don’t. Again, it depends on when the nomination or nominations come forward. And then there’s obviously the committee’s process and then you have to get through the Senate floor.

There are many variables that come into play with nominations and confirmations.

What would you say to critics who say that FERC should take concerns about climate change or the environment more seriously?

Look, I care about the environment. I care about climate change.

I think U.S. [liquefied natural gas] exports can have a positive impact on lowering global carbon emissions by displacing more carbon-intense fuels used in Asia and elsewhere in the world. I think some of the market-driven initiatives that the commission has taken — most recently enabling battery storage resources to be compensated for all of their attributes — I think those kinds of things will have a positive benefit on the climate.

I think the bulk of the fight that people are seeing is over our analysis of GHG emissions in our evaluation of pipelines. I just don’t believe that the Natural Gas Act authorizes us to do this kind of analysis. I don’t think we in an independent regulatory agency should be making new policy. That direction has to come from Congress.

Can you explain why pieces of the Division of Energy Market Oversight will live at different parts of FERC?

It was just a better alignment of the staff [and] the commission’s resources.

How will that affect the level and quality of oversight of energy markets?

I don’t believe it’ll have any impact on our ability to conduct the necessary oversight that is required.

There has been some criticism. Do you feel like a report to Congress is necessary?

If you talk to experts within FERC and FERC stakeholders, they will tell you that there is nothing nefarious going on here. This is simply a matter of efficient reorganization.

The Public Utility Regulatory Policies Act is on the agenda for Thursday. Can you give any update on what’s going to be discussed?

I can’t speak to it before the open meeting.

Can you give an overview on what you think about PURPA or how you’re coming into the discussion about it?

I’ve been pretty vocal. I think PURPA, when it was initially envisioned in the late 1970s, the energy marketplace and the energy world just looked completely different. It was a time where the Carter administration thought we were running out of natural gas and oil and wanted to spur the development of renewables.

I think PURPA was a success and did its job for a number of decades, but the realities of today’s marketplace — it’s just completely changed since when PURPA was enacted. And so I just think it’s time to better align PURPA with realities of the 21st century energy market.

Can you talk about your priorities at this point after being a chairman this time around for almost a year?

A lot of the things that we are working on are things that the prior chairman, the late Kevin McIntyre, had put into motion.

Executing on the vision that he laid out is something that I have said is a priority of mine. I think getting the requisite energy infrastructure in place to maintain the reliability of the grid will continue to be a priority of the commission. I think cybersecurity and continuing to ensure that we stay ahead of our adversaries and bad actors who wish to disrupt the reliability of the electric grid will continue to be a priority.

I think looking at our pipeline approval process and finding ways to accommodate concerns that are being raised by landowners will be a priority. I think we have an important notice of inquiry looking at how the commission does incentives and sets return on equities for transmission. I want to make sure that we are building out the grid of the future and I want to, you know, make certain that we are employing the best incentives to draw in the investment.

I mentioned modernizing PURPA has … long been a priority of mine. If at the end of my tenure I can look back and say that we created a regulatory ecosystem that enables new technologies to flourish and to be compensated and remove barriers to entry I’ll be, you know, very pleased.

So a few things on the agenda.

This is an exciting time … in our energy landscape. It’s a complicated time. We’ve got a number of difficult questions before us.

The one that’s getting a significant amount of attention right now, which I can’t get too much into the specifics on, is the collision of state policies and markets. Tough one for me.

Since I landed here, I’ve already heard "Don’t mess with Texas" about four different times. As a conservative, I believe fundamentally in states’ rights and the ability of states to make decisions about their energy future.

But I also want these markets to succeed. And the reality is there [are] states that are taking actions that are having a distortive impact on the markets and are impacting other states who, you know, are part of that compact agreement to work in these markets. It’s just a difficult question that we have to tackle.

We still hear people talking about possibly helping coal and nuclear plants. We see that in some states. What role does FERC play in that process?

We’re a fuel-neutral regulator. We are not going to put our thumb on the scale to favor one fuel source over another.

In the fall of 2017, the Department of Energy submitted a notice of proposed rulemaking to the commission and ultimately we found that the proposal did not meet legal muster under the Federal Power Act. And we unanimously voted to reject it, but in doing so we opened up a new proceeding to look into grid resilience. And I think that combined with efforts from the [regional transmission organizations] and the [independent system operators] to look at fuel security are critical and important.

I think [Energy] Secretary [Rick] Perry raised an important issue on this matter and question of grid resilience and it’s one the commission is exploring. We’re going to seek to define what resilience is, what attributes we want to value in looking at grid resilience. We want to determine in a fact-based, evidence-based, analytical way whether in fact there is a threat to the resilience of the grid.

And if we find that in some regions of the country there is a potential threat to the resilience of the grid, we will then have to determine what steps would be needed to take. And my preference, and I think my colleagues’ preference, would be any such steps be market-based.

There’s not a set time?

We’ve got a pretty robust record. I don’t like to make commitments on timing. [It’s] something that’s foremost on our mind.

People will say they feel like FERC is being too political or partisan. What do you make of those charges?

It bothers me a lot. There is this sense that the agency is becoming politicized. If you look since I took over as chairman in October of 2018, unfortunately my friend and colleague Chairman McIntyre fell ill at that time and wasn’t able to vote, so literally every single decision that has come out of the commission in the last year — every single one — has been bipartisan because we’ve been 2-2 on the commission. And so it took a bipartisan coalition to vote out every single decision.

Even when we voted out matters 3 to 1, at least one of my colleagues dissented or wrote separately.

I just think there’s some, you know, philosophical differences on nuanced questions of law. I don’t think that’s an indication that the agency’s political.

The departure of Cheryl LaFleur changes things a bit.

Correct. But I think it would be unfortunate if items that she might have voted for that we would have been able to pass 3-1, because she’s left and we passed them 2-1, that doesn’t make them any more political than they would have been had she been there voting for it.

How long do you plan to stay at the commission?

My term runs until June 30, 2021. I am someone who believes that when you take these jobs you make a commitment to the president that nominates you, to the Senate that confirms you and to the regulated community that you ought to finish out your term. And so I intend to do that and will talk to my family and others and see if another term is in the cards. I’ve got two more years to make that decision.

Do you have any concerns about losing your chairmanship again for some reason?

That’s a decision that is up to the president of the United States. He can designate a new chairman at any time. I don’t have any reason to believe that that would occur. I think I’ve done a very good job.

You’ve enjoyed the last year or so?

Enjoyment is a stretch. It’s a hard job. It’s a stressful job. But I wake up every morning hoping that I can do right by the public and serve the public interest and just try my best.

This interview has been edited and condensed. Reporters Rod Kuckro and Jeremy Dillon contributed.

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