Richard Glick, the sole Democrat on the Federal Energy Regulatory Commission, has some thoughts about what the agency in charge of key federal energy policies might be asked to accomplish under the incoming Biden administration. As the current FERC commissioner considered most likely to be named chairman once Joe Biden is sworn in as president, those thoughts are worth knowing.
On Tuesday, Glick spent a half-hour sharing his views with Gregory Wetstone, CEO of the American Council on Renewable Energy, as part of the trade group’s virtual Grid Forum event. While he declined to comment specifically on matters before FERC, Glick did make clear that he’s unhappy with some key decisions imposed by his Republican colleagues on the interstate energy market operators under FERC jurisdiction.
Glick’s perspective on FERC’s orders regarding the capacity markets run by mid-Atlantic grid operator PJM and New York state grid operator NYISO won’t surprise those who’ve read his harsh critiques of what he views as their illegal and poorly thought-out imposition of federal limitations on state-subsidized clean energy resources.
But Glick, the former government affairs director for Avangrid Renewables and Iberdrola and general counsel for the Democrats on the Senate Energy and Natural Resources Committee, has also joined with Republican and former FERC Chairman Neil Chatterjee on some other decisions.
Those include FERC Order 2222, which requires the country’s independent system operators and regional transmission organizations to open their markets to distributed energy resources, as well as FERC’s policy statement expressing openness to considering ISO and RTO carbon-pricing proposals.
Chatterjee has speculated to news outlets that his support for these initiatives led to the Trump administration replacing him as FERC chairman with the more conservative James Danly earlier this month. While Glick said he’d read those reports, he declined to speculate on their accuracy.
Nor did he single out Danly’s recent decisions to cancel a FERC event to gather information on electric-vehicle-to-grid integration or to call off monthly press briefings that have been traditional for decades for particular criticism.
And while Glick pointed out that “it appears that Chairman Danly will only be chairman for a couple of months,” he did not assume that he would be named to replace him. “It’s up to the new president to decide who leads the commission.”
But as the only Democrat sitting with two Republicans, and the Democratic and Republican nominees to fill the commissions’ two open seats still awaiting U.S Senate confirmation hearings that aren’t certain to conclude in a timely fashion, industry watchers expect that Glick will indeed be Biden’s choice.
That won’t change the balance of votes for or against certain policies — “we have to get a majority of the commissioners to go along,” he said. But it could allow Glick to set FERC’s agenda on critical matters ranging from wholesale energy market operations to interregional transmission policies.
FERC’s orders on PJM and NYISO capacity markets need to be revisited
“I cannot talk about pending cases,” Glick said. “But I think the commission has done a disservice to state clean energy programs by adopting a MOPR-type program, essentially raising the costs of generation that’s subsidized in some way by states focused on clean energy.”
MOPR stands for "minimum offer price rule," a regulatory construct that FERC’s Republican majority has used to order PJM to force state-subsidized resources to use administratively set minimum prices when bidding into its roughly $10-billion-per-year capacity market. A similar concept has informed FERC’s decisions to deny NYISO’s proposals to exempt state-preferred renewables and energy storage resources from buyer-side mitigation rules.
Beyond postponing PJM’s capacity auctions for the past two years, FERC’s MOPR orders could prevent some clean energy resources from clearing the market, driving up capacity prices to the benefit of fossil-fuel-fired power plants, and exposing customers across its 11 states to billions of dollars per year in excess costs in the next decade. That possibility has led states including Illinois, New Jersey and Maryland to consider taking steps to depart PJM’s capacity market.
Glick noted that legal challenges to FERC’s PJM order may well lead to courts agreeing with his view that “I don’t think it’s legal” for FERC to impose its authority over state energy policymaking in this way. If courts made that decision, he said, “I think it would be the obligation of the commission to rework those orders.”
But even if that doesn’t happen, “I think it’s bad regulatory policy, in the sense that it will raise prices unnecessarily, but also block states from what I think is their legitimate role to not only choose their own resource mix but [also] set goals on carbon reduction.”
FERC has the authority to unblock transmission and address grid reliability
Glick added that it’s highly unlikely that the Biden administration will be able to meet its aggressive decarbonization goals “unless we can access significant amounts of newly built renewable resources,” which won't be possible "unless we significantly build out the grid.” But U.S. transmission build-out has been languishing over the past five years and remains far behind what multiple analyses say is needed to integrate far-off wind and solar power.
To fix that, Glick says FERC should use its authority under Order 1000, created in 2011, to set new ground rules for how costs are allocated for transmission projects built between different ISOs and RTOs. As we’ve noted in previous coverage, Order 1000 has yet to drive breakthroughs in the regulatory and legal bottlenecks that have largely stymied interregional transmission projects, and clean energy groups have been asking FERC to take stronger steps to allow them to move forward.
FERC has also ordered ISOs and RTOs to assess the resilience of their transmission networks amid a rapidly changing resource mix. California’s rolling blackouts and grid emergencies this summer, driven by regionwide heat waves, highlight the impacts of climate change on energy security, Glick said.
“There are certainly resource adequacy issues throughout the West,” he said. “In my estimation, we need to take resource adequacy more seriously.”
“That doesn’t mean that you need to impose mandatory capacity markets like we have in the East,” which the U.S. West lacks, he cautioned. But it does mean that “we need to figure out a way to adequately compensate resources for the value they provide the grid,” in Glick's view.
That will likely include energy storage systems playing into the wholesale market structures being created under the FERC Order 841 mandate, he noted. “That value may be flexibility, through ancillary services markets, or some kind of modified capacity market or flexibility market,” he said. “I think storage is going to play a big role in that.”