Revitalized FERC off to a fast start

With a full complement of five commissioners for the first time in months, the Federal Energy Regulatory Commission Dec. 21 got off to fast start, including agreeing to review its controversial process for granting approval of natural gas pipelines. The commission also issued a proposed rule to heighten reporting of cybersecurity issues through the North American Electric Reliability Corp. and withdrawing a previous proposed rule on pricing of fast-start generation by regional transmission organization in favor of specific orders for the New York Independent System Operator, the PJM Interconnection, and the Southwest Power Pool.

The announcement of the pipeline process inquiry came from new chairman Kevin McIntyre at the end of the December open meeting, saying he wants the commission to review many of its practices and processes. He said the inquiry would begin with the commission’s 1999 “Policy Statement on Certification of New Interstate Natural Gas Pipeline Facilities.”

FERC Chairman Kevin McIntyre

“Much has changed in the energy world since 1999,” McIntyre said, “and it is incumbent upon us to take another look at the way we assess the value and viability of our pipeline applications.” FERC came under attack throughout 2016 both politically and by local activists, including protests at commission meetings and picketing of some commissioners’ homes, as the agency faced a deluge of applications for new and upgraded pipelines as a result of the fracking revolution. Opponents raised issues of failure to consider environmental implications, including greenhouse gas emissions.

Commissioner Richard Glick noted at the meeting that pipeline applications at the commission have grown by over 500 percent in the past six years. Both he and Commissioner Cheryl LaFleur said they have two specific elements they would like to see reviewed in the process: the determination of need in the evaluation process and the environmental review process.

Commissioner Neil Chatterjee said he is “supportive of our current policies,” but agreed that it is important to look at the current policy and see if it needs improvement. He said he supports “continuing the existing approach where appropriate.” Commissioner Robert Powelson, a former Pennsylvania utility regulator, defended FERC’s pipeline processes. “We don’t rubber stamp interstate pipelines here. We don’t site pipelines on speculation here at FERC.”

While not laying out a time frame for the review or any details, McIntyre said he will announce the next steps in the “near future.” He said the review would be thorough and FERC would seriously consider the views of all the stakeholders. “I am approaching this topic with an open mind and want the staff and the commission to take a fresh look at all aspects of the issue.”

FERC also approved a proposed new rulemaking on reporting incidents of cybersecurity threats, to be carried out under NERC. NERC’s current cyber standard calls for reporting incidents only “if they have compromised or disrupted one or more reliability tasks.” That means that attempted attacks don’t get reported. The new rule would call for report attempts to penetrating high and medium risk systems. LaFleur noted that there is a well-established relationship “between minor issues and near misses” and less common successful attacks in many areas of risk assessment.

FERC also dropped a December 2016 proposed rule of fast-start pricing for all of the competitive wholesale markets under its jurisdiction, concluding that a “one size fits all” approach is unnecessary. Instead, it initiated investigations of fast-start rules in the three ISOs, under Section 206 of the Federal Power Act, to determine if they result is just and reasonable pricing. It is the latest move in FERC’s marathon price formation inquiries.

— Kennedy Maize