A badly fractured Federal Energy Regulatory Commission failed to achieve a quorum yesterday, allowing a proposal by the Independent System Operator-New England to compensate coal and nuclear generators with millions in extra payments for having a three-day fuel supply on hand during a winter coal snap to go forward.
While FERC has a sitting quorum of two Republican commissioners, including chairman Neil Chatterjee, and two Democrats, including soon to exit Cheryl LaFleur and Richard Glick, both LaFleur and new Republican commissioner Bernard McNamee chose not to participate in the decision, meaning it went into effect. Neither LaFleur nor McNamee explained their recusals, although LaFleur has often bowed out on votes that impact New England, where she was an important energy executive before joining FERC nine years ago.
Under current law, when FERC is unable to vote on a filing because of the shortage of a three-member quorum, the filing can go into effect.
With only two commissioners available to vote on the ISO’s plan, only Chatterjee and Democratic commissioner Richard Glick were willing to outline their views. Chatterjee said he would have approved the filing, designed to bolster the region’s capacity during hard winters when natural gas supplies get diverted to contracted heating and industrial loads ahead of electric generation.
Chatterjee wrote, “I would have voted to accept the proposed Tariff revisions as a just and reasonable short-term solution to help compensate resources that provide winter energy security and improve reliability while ISO New England develops a long-term market solution. The Commission must balance competing interests when evaluating whether a rate is just and reasonable. In addition, it is well-settled that the entity filing a proposal need only demonstrate that the proposed revisions are just and reasonable, not that the proposal is the most just and reasonable proposal.”
Glick issued a blistering critique of the New England plan, which he would have voted against. He wrote, “In my view, ISO New England’s Inventoried Energy program is patently unjust and unreasonable. The program will cost New England consumers as much as $300 million without any evidence to suggest that it will actually improve the region’s fuel security or that any improvement is likely to be worth the cost. Indeed, the program goes so far as to hand out substantial payments to nuclear, coal, and hydropower generators with no indication that these payments will change their behavior in the slightest. That is a windfall, not a just and reasonable rate. But without a quorum there is nothing the Commission could do to prevent this program from taking effect.”
In a Tweet, Glick said, “Based on the record, one cannot help but wonder whether burning the money might contribute as much to fuel security as wasting it on resources like coal and nuclear generators that we know won’t do anything in response.
Commenting on the issue for E&E News, veteran energy reporter Rod Kuckro said, “It is highly unusual for FERC commissioners to not take an up-or-down vote on proposed tariff changes for a regional grid operator like ISO New England, according to several former and current FERC staff and a historical search of agency records. The last time FERC allowed a significant tariff change to take effect without approving it via majority vote — in 2014, also in New England — the associated rate hikes rankled some members of Congress and led to a flurry of legislation.
When LaFleur leaves at the end of the month, FERC will find itself in a precarious situation, with a quorum of three members – Republicans Chatterjee and McNamee and Democrat Glick. Any one of the three could stall action on items before the commission by recusing himself. How that might play out is unknown.
In the meantime, the Trump administration shows no signs of interest in filling the soon-to-be two vacant slots on the commission. If past practice is a guide, the administration will pair the nominees, with one Republican and one Democrat.
— Kennedy Maize