Speaking Energy

On June 28, 2024, in Loper Bright Enterprises v. Raimondo, the U.S. Supreme Court overruled Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., which for 40 years required court deference to reasonable agency interpretations of federal statutes in certain circumstances, even when the reviewing court would read the statute differently. The Court ended “Chevron deference” and held that courts “must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.” In doing so, the Court upended a longstanding principle of administrative law that is likely to make agency decisions more susceptible to challenge in the courts.

On Thursday, May 4, 2023, the U.S. Senate Energy and Natural Resources Committee, led by Chair Joe Manchin (D-WV) and Ranking Member John Barrasso (R-WY), held a Full Committee Hearing to Conduct Oversight of the Federal Energy Regulatory Commission (FERC). All four sitting FERC Commissioners, including Acting Chairman Willie Phillips, James Danly, Allison Clements and Mark Christie, testified before the Committee, with most of the Committee members present. The reliability of the U.S. power grid, and FERC’s role in designing markets and approving projects that promote reliability, was a primary focus of the hearing. Senators Manchin and Barrasso, who both hail from coal-producing states, elicited testimony from all four Commissioners that the elimination of coal-fired generation would hinder grid reliability.  The Commissioners also agreed with the Senators’ contentions that reliability provided by coal-fired and natural gas-fired generation cannot currently be replaced with renewable generation. Commissioner Phillips also testified that FERC must be resource neutral and agreed with questions from Senator Barrasso that delayed natural gas pipeline projects undermine efforts to integrate wind and solar facilities into the grid. Commissioner Danly explained that the operational characteristics of thermal generation resources support frequency and voltage in a manner that intermittent resources currently do not.  Commissioner Christie, consistent with comments he has made during FERC’s open meetings, testified that retirements of dispatchable resources, not the addition of renewable energy resources, threatened grid reliability. The Senators also sought follow up on FERC’s natural gas pipeline certification policy, which was the subject of a heated oversight hearing in March 2022, and for information on hydropower licensing reform.

As the 2020 election nears, the Democratic campaign has begun to talk policy specifics regarding energy and climate change. Although the Trump administration undertook to dismantle many Obama-era policies and regulations, a Biden administration may be unlikely simply to return to the pre-Trump status quo. Vice President Biden has a reputation as a moderate, but he is an experienced politician who gravitates not to the political center, but towards the center of his own party.¹ Shifts in the Democratic coalition have moved that center leftward, while the public as a whole expresses increasing concern about the impacts of climate change.² Reflecting this shift in the political winds, Biden’s “Build Back Better Plan” for rebuilding the economy post-pandemic proposes ambitious energy goals. Among those goals are carbon neutrality in the power sector by 2035, economy-wide carbon neutrality by 2050, and a national Energy Efficiency and Clean Electricity Standard (EECES).³

On September 19, 2019, the Federal Energy Regulatory Commission (FERC or the “Commission”) proposed to “modernize” its regulations under the Public Utility Regulatory Policies Act of 1978 (PURPA) to “better sync [them] with the modern energy landscape, while continuing to” protect consumers and “encourage development of qualifying facilities” or “QFs.”¹ Chairman Neil Chatterjee and Commissioner Bernard McNamee offered full support for the proposed reforms,² while Commissioner Richard Glick dissented in part, arguing that they would “effectively gut” PURPA and that such substantial changes should be made by Congress, not FERC.³

On December 16, 2015, the Federal Energy Regulatory Commission (FERC or the Commission) issued an Order to Show Cause and Notice of Proposed Penalty (OSC) directing ETRACOM LLC and its principal member and trader, Michael Rosenberg, to show cause why they should not be found to have violated FERC’s Anti-Manipulation Rule in connection with certain allegedly uneconomic virtual supply trading activities in the California Independent System Operator (CAISO) wholesale electricity market, which FERC claims were intended to benefit ETRACOM’s Congestion Revenue Rights (CRRs) positions. In the OSC, FERC proposes to assess civil penalties of $2.4 million and $100,000 against ETRACOM and Rosenberg, respectively, and to require ETRACOM to disgorge $315,072 plus interest in unjust profits. The ETRACOM case is the latest in a series of cases in which FERC’s Office of Enforcement (OE) has alleged that market participants have violated the Anti-Manipulation Rule by engaging in uneconomic transactions for the purpose of affecting market prices to benefit related positions.

On October 16, 2015, the Federal Energy Regulatory Commission (FERC) issued Order No. 816, a Final Rule streamlining its requirements for authorization to make wholesale sales of electric energy, capacity and ancillary services at market-based rates (MBR), including eliminating or modifying certain filing requirements.¹ FERC stated that the purposes of the Final Rule are to reduce the administrative burden of the MBR program on sellers and FERC, provide clarification regarding the standards for obtaining and maintaining MBR authority, and increase transparency while ensuring that MBRs charged by public utilities are just and reasonable. This post summarizes FERC’s major modifications and clarifications in the Final Rule, which will become effective 90 days after publication in the Federal Register.