Daily on Energy: FERC chairman assures he won’t ‘blow up’ the energy markets

Pushback against Perry: The Perry plan has caused broad pushback from industry and others, which see it as a potential threat to the existing market structure that the commission has stood up over the last two decades and currently oversees.

What Perry wants: Perry wants coal and nuclear plants compensated through a market mechanism that rewards the ability of those generators to have fuel reserves that last 90 days if a major supply disruption occurs.

FERC Commissioner Rob Powelson said last week that he would oppose any plan that harms the markets. Commissioner Cheryl LaFleur, a Democrat on the commission, concurred on Twitter.

What Powelson said: “I give Energy Secretary [Rick] Perry credit. He’s trying to be thoughtful in the approach, but there are many different approaches to how we can tackle this issue. I did not sign up for blowing up the markets. We will not destroy the marketplace.”

What it means to blow up the markets: According to Chatterjee, “blowing up” the market means states pulling out of the grid operator regions that the commission oversees and helps regulate.

A ‘difficult’ issue: The Perry proposal is amongst the more “difficult issues” that FERC will be wrestling with over the next 60 days, said Chatterjee, while “commending” the energy secretary.

“We have examined this issue at length,” he noted, referring to FERC’s long record on exploring price formation changes it could make in the electricity markets that would get at what Perry has proposed.

Following Perry’s lead: “What Secretary Perry has done has … accelerated this conversation so that we can take action,” Chatterjee said.

He said FERC plans to move ahead. Perry’s proposal will not “linger” or “get punted,” Chatterjee said. He said the 60 days that Perry gave FERC to act is enough time.  

Whoops, didn’t mean to say that: During the press conference on Friday, and after receiving countless questions on what “blow up” means, Chatterjee then said he didn’t use the phrase blow up, at all. The comment was followed by a cacophony of “yes, you did!” by reporters.

Chatterjee blamed his forgetfulness on a late night of watching the Washington Nationals play the Chicago Cubs.

‘Aggressive options’: “The EPA in a serious effort has plenty of tools to gather information on how power plants operate, analyze that information and identify ways that significant emissions reductions could be mandated on site,” said Joe Goffman, a chief architect of the Clean Power Plan who was the lead attorney at the EPA when the Obama administration created the rule in 2015. “You could tee up a lot of options, including ones that are aggressive.”

Sincere questions: But experts doubt how committed Pruitt is to establishing his own regulation mandating emissions limits on coal and natural gas plants, predicting he may try to slow-walk the rule-making process so he never has to sign something that conflicts with his political interests.

Indeed, Pruitt, as Oklahoma’s attorney general, sued the federal government more than a dozen times, including over the Clean Power Plan, which requires states to reduce carbon emissions by 32 percent below 2005 levels by 2030.

‘Loves coal’: “Scott Pruitt loves coal, and Donald Trump loves coal, and they will do everything possible to leave coal alone and not regulate it at all,” said David Bookbinder, chief counsel at the libertarian Niskanen Center and former chief climate counsel at the Sierra Club.

Bound to act: But even the fiercest critics of the Clean Power Plan say Pruitt may have no choice but to act because the EPA is bound to regulate emissions of carbon and other greenhouse gases under a 2009 agency rule known as the endangerment finding.

“I am not a lawyer, but lawyers have made that argument quite a few times, and I listen to it,” said Myron Ebell of the free market Competitive Enterprise Institute, who led President Trump’s EPA transition team. “They will need some replacement.”

What the Clean Power Plan did: So what could Trump’s EPA do? It’s important first to know what the Clean Power Plan did. Under the rule, the Obama EPA gave each state a goal for reducing emissions and encouraged broad ways to meet those targets, such as moving away from coal to natural gas, and transitioning to wind and solar power. The power plan interpreted the Clean Air Act in a way that allowed it to regulate power plants outside the “fenceline” of the facilities themselves.

‘Inside the fenceline’: Pruitt told the Washington Examiner in an interview last month that he would seek to regulate power plants individually, in a process known as “inside the fenceline.” For example, the EPA could mandate heat rate improvements in power plants, which would burn coal more efficiently by creating more electricity per unit of coal.

What Pruitt could do: Goffman, the former Clean Power Plan architect, said the EPA could achieve emissions reductions of about 5 percent if it strictly focused on efficiency improvements inside power plants and potentially double that if the agency encouraged the adoption of carbon capture and storage technology.

“If I were in the utility industry, I would not assume that a replacement rule that relied only on within the fenceline would be merely a modest rule,” Goffman said

‘Modest’ expectations: But few expect Pruitt to mandate carbon capture and storage because it’s expensive to implement.

That’s partially why Ebell predicts the EPA will make a modest regulation.

“What [the Trump administration] will try to do is say, yes, we will abide by the letter of the law and regulate greenhouse gas emissions using the tools the Clean Air Act has allowed for in regulating individual power plants,” Ebell said. “Doing what’s in the boundaries of the law turns out to be very modest.”

Long road ahead: The repeal plan introduced by the Trump administration could take months to implement. Separately, the EPA said it would ask the public for ideas on how to replace the Clean Power Plan.

In the next few weeks, the agency will issue an advance notice of proposed rule-making that sets forward the public comment process before issuing a new regulation.

Progress being made: Even without a regulation, the U.S. is transitioning away from coal to natural gas and renewables.

The U.S. is halfway toward meeting the Clean Power Plan’s emissions reductions goals without the rule having ever taken effect because it was stayed by the courts.

Read our full story on Pruitt’s replacement options here.

Change of plans: He was planning to go, said Kasich spokesman Jon Keeling. But then a scheduling conflict arose and the Republican governor decided this week that he was “not going to attend.” He could not say, specifically, what the conflict is.

Although former Senate Democratic Leader Harry Reid is hosting the event, it was Nevada Gov. Brian Sandoval, a fellow Republican, who invited Kasich. Sandoval is co-hosting the all-day event with Reid.

Few Republicans to show up: Kasich would have been one of the only Republican state leaders to address the conference, which is dominated by former Obama administration officials and the likes of former Vice President Al Gore.

Republicans close the event: Sandoval will close the event with a panel discussion called “States Leading the Charge.”

An Oct. 6 update from the summit, which still had Kasich listed as confirmed, also listed Democratic Gov. Jerry Brown of California as attending with Republican Gov. Charlie Baker of Massachusetts.

Sandoval is the current chairman of the National Governors Association. He will lead a panel of governors “to explore how state investments in innovation and support for clean energy initiatives are increasing the deployment of renewable energy, reducing energy consumption, improving the environment and driving economic growth.”

Big on solar: Sandoval’s state is committed to transitioning to renewable energy, particularly solar power, and phasing out its coal-fired power plant fleet.  

Nobel laureate Gore: Gore is described on the agenda as “Nobel laureate and former vice president,” who “will discuss the important role clean energy plays in the fight against climate change.”

Clean energy kumbaya: That will be followed by a number of panel discussions on the growing role of renewables in cities and rural areas, as well as the rise of electric vehicles.

At the fireside: The lunch speaker will be Ernest Moniz, former President Barack Obama’s energy secretary.

National security: The afternoon segment with talk up energy innovation as a national security imperative, highlighting the military’s commitment to clean energy development such as the large solar array at the Nellis Air Force Base in Nevada.

High-stepping: Appearing before the House Energy and Commerce energy subcommittee, Perry did not defend the proposal as aggressively as in his prepared remarks in which he said the plan “is just a first step” in his efforts to ensure the reliability of the nation’s electric grid, suggesting he could take further action. Curiously, he didn’t mention the proposal in the opening statement that he delivered to lawmakers, and he softened what he said it was intended to do.

Conversation starter: “I want to hear both sides of this [debate] and have a very robust and open conversation,” Perry told lawmakers in response to questions from Democrats critical of his proposal. “I don’t have any idea if there are better options. I am not saying my [proposal] is the be-all, end-all. But obviously, it’s been very successful in getting a conversation started.”

Lawmaker split: Republicans asking questions at the hearing mostly supported Perry’s proposal, although Rep. Fred Upton, R-Mich., the chairman of the energy subcommittee, said he would “reserve judgment.” Democrats, meanwhile, were uniformly opposed to the grid proposal.

Consumers ‘short-circuited’: In the most memorable exchange, Rep. Kathy Castor, D-Fla., highlighted studies by experts that show Perry’s proposal could cost consumers “billions.”

“There is just no rational basis for this FERC rule you are trying to move through as quickly as possible,” Castor said. “I am concerned a discussion about how this will increase prices for consumers is being short-circuited. How do you give voice to consumer concerns about massive price increases?”

Rejection possible: Perry opened the door to FERC rejecting his recommendations. “If the letter to FERC is what you say it is, they won’t go forward with [the proposed rule],” Perry replied to Castor.

Cramer takes offense: “I find it rather offensive that some people suggest you’re putting the thumb on the scale, when the fact is you are just rebalancing the scale,” the North Dakota Republican said Thursday at the House Energy and Commerce energy subcommittee hearing.

But did the Trump energy adviser go too far by suggesting that the FERC-overseen electric markets are a source of market manipulation?

What’s an RTO, anyway?: “The whole idea of RTOs is to manipulate markets,” Cramer said. “That’s why we have RTOs. It’s not a free market.” RTO stands for regional transmission operator, the formal name for the giant public utilities that run the FERC-overseen wholesale markets.

Lumped all together: He listed the markets in the same category as state renewable energy mandate, federal wind subsidies, and Energy Department loan guarantees for advanced power plants, which he sees as distorting the market.

The big difference, he might have pointed out, is that the Federal Power Act requires those markets to approve rates that are fair and reasonable, and drive innovation through competition. They set the rules of the game, not the policy.

North Dakota’s RTO: Parts of North Dakota resides in the Midcontinent Independent System Operator, the second largest RTO in the country.

The Perry rule would only affect the RTO regions, which includes some of the most densely populated areas of the country where electricity demand is the highest.

Military tradition for non-military role: The blue banner, featuring the Interior’s bison seal and seven white stars representing the department’s bureaus, is hoisted by a security staffer when Zinke, a former Navy SEAL commander, enters his downtown Washington offices before being pulled down when he leaves, per the Washington Post.

A spokeswoman for Zinke told the newspaper that the custom — not adopted by any other Trump Cabinet official — was “a major sign of transparency.”

That’s certainly one way to describe it.

Her resume: White is a former chairwoman of the Texas Commission on Environmental Quality who currently works at the Texas Public Policy Foundation, a conservative think tank that has received funding from Koch Industries, ExxonMobil, Chevron and other energy companies.

Defender of carbon: Like other Trump administration officials, she has expressed doubt about mainstream climate science, and has written numerous essays and op-eds about climate change, including one in which she said “carbon dioxide is not a pollutant.”

“Our bones and blood are made out of carbon,” White wrote in a June op-ed.

White, in another op-ed last year, said Obama’s climate change policies were “deluded and illegitimate.”

Important role: These views will concern environmentalists considering the importance of the job White was chosen for.

The Council on Environmental Quality coordinates environmental policy at the White House. She would be in charge of implementing Trump executive orders on energy and the environment. These include a Trump order for the council to eliminate guidance directing all federal agencies to consider climate change when they conduct environmental reviews under the National Environmental Policy Act.

In January, Trump told the council to establish a plan to speed environmental reviews for major infrastructure projects.