ARLINGTON, Va. – The National Rural Electric Cooperative Association today expressed deep disappointment after the Federal Energy Regulatory Commission refused to reconsider a critical aspect of a rule governing energy storage resources in wholesale electricity markets.

“FERC has side-stepped the Federal Power Act, which preserves state and local regulatory authority over retail electric distribution service,” said NRECA Chief Executive Officer Jim Matheson. “The commission has dealt a blow to consumers and dramatically expanded its authority by giving itself the discretion to decide which distributed and behind-the-meter energy storage resources can participate in wholesale electricity markets. In doing so, FERC has undermined the ability of local utilities and regulatory authorities to manage these resources for the benefit of consumers.”

Order 841 stands in sharp contrast to FERC’s rules on demand response aggregation, which appropriately allow relevant state and local regulators to decide which aggregators may participate in wholesale markets. NRECA urged FERC to incorporate similar language into Order 841.

The National Rural Electric Cooperative Association is the national trade association representing more than 900 local electric cooperatives. From growing suburbs to remote farming communities, electric co-ops serve as engines of economic development for 42 million Americans across 56 percent of the nation’s landscape. As local businesses built by the consumers they serve, electric cooperatives have meaningful ties to rural America and invest $12 billion annually in their communities.

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The Federal Energy Regulatory Commission’s acting chairwoman told an Energy Department panel that the shorthanded commission and its staff are nonetheless reviewing several items for possible consideration by an eventual “FERC 2.0.”

Speaking to the Electricity Advisory Committee, Cheryl LaFleur described the work she is doing with Commissioner Colette Honorable while three of five commissioner seats are vacant.

She described it as triage—”building the record for rulemakings when new commissioners get here”—while acknowledging that the new chairman will decide what to prioritize.

On the Agenda, Maybe

LaFleur indicated that prospective action items involve pricing to ensure it “reflects the real cost of keeping the lights on.” Another area is storage and distributed resources, with the latter topic drawing much more controversy than the first and the two possibly headed for “different trajectories.”

Other possible items include transmission competition; the commission’s use of data, which she said had improved under former chairman Norman Bay’s leadership; and the Public Utility Regulatory Policies Act, the focus of a recent FERC technical conference.

Finally, LaFleur indicated, there is the “the very complicated question” of market rules and state initiatives to choose resources.

“I worry that if we don’t get ahead of this we’ll have unplanned re-regulation,” she cautioned during the March 30 session at NRECA headquarters in Arlington, Virginia.

Committee member Pamela Silberstein, NRECA senior director, power supply counsel, suggested another item for consideration, “Gas-Electric Coordination 2.0.”  She noted that many NRECA members are experiencing new demands on gas-fired generation due to the rising level of intermittent resources in the market.

This has imposed new demands on pipelines, Silberstein said, emphasizing the need for coordination is “as potent as it has ever been.”

LaFleur responded that “there’s more work to be done in this area.”

Business as Unusual

FERC lost its third member and its quorum in early February when then-chairman Bay resigned in the wake of President Trump’s designation of LaFleur as acting chairwoman. She told the DOE panel that she was “surprised and disappointed” by Bay’s abrupt departure.

The commission delegated authority to staff to continue certain agency operations before losing its quorum.

However, LaFleur specified, the pace of progress has slowed considerably; staff has issued 33 orders since early February, significantly less than the 100 it normally issues each month.

“We’re building up quite a backlog,” she observed.

The lack of a quorum has had impacts on many FERC licensees.

For instance, Winchester-based East Kentucky Power Cooperative’s waiver request on transmission access requirements was rejected, without prejudice, because the short-handed commission cannot consider major and contested cases. This will possibly force the co-op to restart the application process at a cost of substantial time and money.

FERC’s acting chairwoman expressed optimism that she could work with the president’s upcoming picks, “as long as they’re energy people.”

While the White House has been silent to date, news reports have indicated that leading prospects for nomination to the open seats include Neil Chatterjee, senior energy adviser to Senate Majority Leader Mitch McConnell, R-Ky., and a former NRECA lobbyist; Kevin McIntyre, co-head of law firm Jones Day’s global energy practice; and Robert Powelson, Pennsylvania PUC member and president of the National Association of Regulatory Utility Commissioners.

Looking (Way) Ahead

LaFleur previously led FERC during the Obama Administration, serving as acting chairwoman from November 2013 to July 2014 and then as chairwoman until April 2015. Tongue planted firmly in cheek, she told the DOE panel that her latest stint at the commission helm would “add a line to my obituary and hasten its appearance.” LaFleur also indicated that she intends to complete her term, which runs through June 30, 2019.

Todd H. Cunningham is a contributor to RE Magazine and NRECA publications.