By Robert Mullin
LA QUINTA, Calif. — While the election of Donald Trump as president of the United States has clouded the future of federal energy policy, one thing is clear: President Obama’s Clean Power Plan won’t figure into it.
Such was the consensus view of a panel convened last week at the National Association of Regulatory Utility Commissioners annual conference to discuss the election’s potential impact on energy sector regulation.
“The Clean Power Plan is done — for the time being,” said Ray Gifford, past chairman of the Colorado Public Utilities Commission and formerly president of the Progress and Freedom Foundation, a now-defunct conservative think tank that advocated for reduced federal oversight of the telecommunications industry.
Gifford said the unwinding of the CPP could be part of a broader effort by Congress “to undertake broad-based regulatory reform,” which would also include eliminating the doctrine of “net neutrality” in telecommunications regulation.
Former Colorado Gov. Bill Ritter, now director of the liberal Center for a New Energy Economy, agreed with Gifford’s assessment, though he didn’t share his enthusiasm that the change would be positive.
“Ray’s right, [the CPP] is likely to be undone,” Ritter said, adding that “it’s connected back to Congress reasserting itself.”
Not So Bleak
Still, the prospects for reducing greenhouse gas emissions aren’t so bleak, speakers said.
“The interesting thing about state work is you realize that, apart from the Clean Power Plan — markets are already driving us to a variety of different methods of decarbonization,” Ritter said, acknowledging that state public policies are driving markets “to some extent.”
But markets have their limitations and cannot “dictate the timing” of dealing with issues such as climate change in a serious way, Ritter contended.
“So, what you’re going to see is a variety of states that are going to say, ‘We’re not going to let the markets control this because we think climate change is this important thing and we need to act,’” Ritter said, referring to the ambitious renewable energy standards enacted by states such as California, Hawaii, New York, Oregon and Vermont.
“It feels to me like there’s some momentum there that’s not going to be necessarily impacted by a course direction at the federal level,” Ritter said.
Moderating the panel was Montana Public Service Commissioner and outgoing NARUC President Travis Kavulla, who asked Gifford whether newly empowered Republicans would allow states to continue to pursue policies favoring renewable resources or intervene on behalf of traditional resource industries.
“I think that’s the big question, Travis,” Gifford replied. “I think Republican orthodoxy is to let the states be laboratories of democracy. You send power back to the states; you let those decisions be made closer to point of contact with the voters and the citizens.”
States’ Impacts on RTOs
But Gifford asserted that RTOs and ISOs are “being roiled by state action underneath them,” citing New Jersey and Maryland legislators’ attempt to fund new generators for their states and efforts by New York, Ohio and Illinois to subsidize existing in-state fossil and nuclear plants. (See related story, Bill to Save Coal, Nuclear Plants Introduced in Illinois.)
“That’s a big issue for the next FERC, and how they deal with it is anybody’s guess because you’ve got a lot of strains going on in markets and you’ve got a lot of states very unhappy with what markets are yielding,” Gifford said. “By watching New York, Ohio and Illinois the next six months to a year, and watching how FERC reacts and how the administration reacts, I think says a lot about the future of these wholesale energy markets.”
Devin Hartman, electricity policy manager at R Street Institute, a think tank that promotes competitive electricity markets and “limited, effective government,” said his organization “doesn’t see a clear need to reform any of the core aspects” of the Federal Power Act, although clarity is needed on what forms of state intervention in the energy sector would be viewed as acceptable under the act.
A specific area of concern: the need for a clearer line between federal and state authority over policies concerning distributed energy resources.
“It’s important to keep the core principles of the Federal Power Act intact, which has been correctly interpreted by FERC to uphold competitive markets,” Hartman said.
Conservative lawmakers might turn their attention to “tackling” the Public Utility Regulatory Policies Act, according to Gifford, who referred to the act as “strange, outdated law” with “a very bad track record.”
False Price Signals
“You can maybe give it credit for juicing the independent power production world,” Gifford said, but PURPA also created “false price signals.”
“It doesn’t fit with Devin’s competitive wholesale market model at all, and it has brought many states to their knees,” Gifford said. “So I’d start with, ‘Let’s erase it and start the bidding from there.’”
Ritter said the potential for grid modernization represented the “biggest difference” between a Hillary Clinton and a Trump administration on issues related to electricity.
“It’s something that you as commissioners should care a great deal about,” Ritter told the audience, referring to the deployment of microgrids, “smart grid” technologies and transmission network improvements.
Ritter said he hopes grid modernization will end up as part of a broader infrastructure package under the new administration.
“But there are a lot of people that hear infrastructure and they don’t think the grid,” Ritter said.
Panelists were asked to conclude the session with a bit of advice for the incoming president and Congressional leadership.
“Pay attention to science,” Ritter said. “I really respect the attention that we need to pay to markets, but markets can’t always dictate timing.” He added that the U.S. needs to understand its “role and obligation in trying to address the very serious global problem” of climate change.
Hartman said it’s important that the country take a “long-term view” on the efficacy of environmental policies that he thinks could cause economic harm without making much of a dent in overall global emissions.
“When we see international environmental progress work well, it’s when the emissions abatement technology was cheap,” Hartman said. “That’s where a long-term innovation agenda is so important.”
Gifford wrapped up with a humorous solution.
“Appoint state commissioners to federal agencies and regulatory commissions,” he said to laughter. “Pandering to the audience, you can never go wrong.”
Clark: Trump Election to Have Limited Impact on FERC
In a separate question-and-answer session with Kavulla, former FERC Commissioner Tony Clark said it was too early to tell exactly what impact Trump’s election would have on the CPP.
“We know that the new administration has indicated that they’re going to look to pull it back in some way,” he said, adding that states will likely have “more time and flexibility” to deal with the changes that would come with the plan.
Clark doesn’t see significant post-election implications for FERC as an agency.
“You tend to not see huge swings out of FERC” after elections, he said. “You’ll have a little more of a bully pulpit, maybe, on some of the reliability issues where reliability and environmental regulations come up.
“But any new group of commissioners brings a [bit of a] different perspective,” Clark said.
‘Unraveling Consensus’
Clark said he thinks there’s been “an unraveling of the regulatory consensus” during the 16 years he’s worked as a utility regulator. He said regulators at one time focused on answering the question of what are the most safe, reliable and affordable forms of energy to serve ratepayers.
Now the questions are myriad.
“In some cases it’s things like, ‘How do I preserve these generation jobs in my state?’” said Clark, who agreed to join law firm Wilkinson Barker Knauer after four years on FERC and 12 years on the North Dakota Public Service Commission.
“How do I preserve my tax base? How do my utilities plan for a carbon-constrained future? How do they reduce their carbon footprint?”
Clark hedged on a question about whether electricity regulation has become more partisan.
“Maybe in some way,” Clark said. “I think so much of environmental politics has come into the job that utility commissioners do.”
Still, Clark said that utility commissions are relatively insulated from politics compared with other federal and state agencies.
Speaking of his time at FERC, Clark noted, “We often said there is no Democrat or Republican way to keep the lights on, and I think that consciously trying to keep politics at bay and out of the regulatory commission was something that was very important for the long-term integrity of the agency.”
