What We’re Watching: FERC Edition

There has been a lot happening at the Federal Energy Regulatory Commission (FERC). Here are some highlights from across FERC’s gas, consumer protection, and electricity market work.

First, watching FERC walk back the implementation of its new policies for evaluating applications to construct interstate natural gas pipelines — and their greenhouse gas emissions — was a hurry up and wait moment. But there is still likely to be significant change in the near future. There are proposals out for comment, and an expansive record of already-filed comments to support big improvements to how FERC considers new projects. While the agency is not there yet, it is moving closer to a more robust, sustainable approach to assessing natural gas infrastructure.

Second, the reply comment period recently closed in FERC’s proceeding to consider what trade association expenditures are properly passed through to utility customers. Trade associations in the energy industry include the American Gas Association and the Edison Electric Institute. Their activities may include direct lobbying as well as regulatory and promotional work that is not within the definition of lobbying — for example, this marketing campaign touting the benefits of cooking with gas. Utilities recover their costs from their customers, and while the portion of a utility’s trade association dues spent on lobbying is presumptively not recoverable, there is a large swath of more ambiguous expenditures that are presumed to be appropriate to pass on to customers.

In response to a petition from the Center for Biological Diversity, FERC asked for comment on the issue of who pays for trade association advocacy and other activities. As comments revealed, there is a need for more transparency into these expenses. Now it’s up to FERC to decide how to proceed.

Third, FERC has an inquiry open into the ability of demand response — broadly speaking, resources that can decrease power consumption as a quantifiable product — to fully participate in wholesale markets for energy, capacity, and ancillary services. When aggregated demand response resources are able to participate in markets, it can help prevent the need for additional generation to meet demand. Prior FERC orders on the issue have left room for states to prohibit demand response from participating in wholesale markets, and a demand response aggregator has asked FERC to remove this opt out. Last month, the House Sustainable Energy and Environment Coalition Power Sector Task Force sent a letter to FERC urging it to address this issue.

At FERC, state attorneys general have been advocating for policies that promote decarbonization, protect consumers, and preserve the state authority in this sphere. FERC has a lot on its plate, and it is worth watching to see what develops in these areas.