A Critical Moment At A Critical Agency as the Baton Goes from Wellinghoff to Ron Binz (Hopefully)

Aug 28, 2013 by  | Bio |  Leave a Comment

There are few more important, and more obscure, agencies in Washington D.C. than the Federal Energy Regulatory Commission the regulator of the wholesale electricity transmission systems and “bulk” (imagine big quantities, like giant tubs from Costco) U.S. electricity markets.

FERC oversees an incredibly complex electricity system.  Our grid meshes together rural systems, where power lines stretch hundreds of miles without interruption, with dense and sophisticated urban networks where millions of people are packed together and drawing power to charge cell phones, watch television, use computers, and make  hospitals, factories, homes and offices all hum.

The age of the elements of these incredibly diverse systems range from “physically touched by Thomas Edison” to “installed hours ago” with all that suggests in terms of technological sophistication.

On top of that physical complexity from a legal and regulatory perspective the American system is a bewildering mix of business and regulatory models with some places served by utilities that own generators and others, like nearly all of New England, served by utilities who are actually generally forbidden from owning power plants. And in contrast to many other parts of the world we mix together privately and publicly owned electricity systems, with many customers served by private “Investor Owned Utilities” but many others served by public entities like “municipal light companies” – and just to make life even more complicated our large generation is mostly owned by private companies with some giant exceptions in the form of hydroelectric dams and other generators owned by States like New York or Federal entities like the Tennessee Valley Authority.

This last bit of complexity is rooted deep in history, notably the declaration by Franklin Roosevelt, when running for President, that he generally favored private ownership of electricity generation and systems but “that where a community — a city or county or a district is not satisfied with the service rendered or the rates charged by the private utility, it has the undeniable basic right, as one of its functions of Government, one of its functions of home rule, to set up, after a fair referendum to its voters has been had, its own governmentally owned and operated service.”  This idea played out in his long run as President when the cornerstones were laid for both gigantic federally owned systems and for the FERC model of regulated private systems.

It is no wonder, given this complex mix of elements that some think the American electricity system is ungovernable.  But a few leaders have succeeded in using the tools available to them to reshape this unwieldy system and steer it in a good direction.  One of those leaders is the current, and soon to be former, FERC Chairman Jon Wellinghoff.

During Chairman Wellinghoff’s tenure FERC has instituted important reforms – pushing time and again for changes that remove the barriers to the new clean resources, like energy efficiency and renewable energy (like wind and solar) that are the rising stars of our energy system.   Under his leadership FERC has pushed aggressively against entrenched policies that gave a leg up to existing generators and utilities simply because they were already in place.  The idea of “pay for performance” that meant that new technologies could earn revenue from providing services to the electricity might sound simple and obvious but FERC has had to fight to make that idea a central tenet in its decision making, beginning with the critical idea (incubated in New England) that efforts to reduce electricity demand should be compensated in markets just like resources that generate power.  Application of the pay-for-performance principle has meant that new technologies that flourished in a small pilot market here in New England can spread across the nation – opening doors for electricity storage systems that will revolutionize the way we generate and use energy.

The biggest single effort that FERC has undertaken during the Wellinghoff era is almost certainly the Order 1000 initiative. Order 1000 mandated thoughtful regional planning of the electricity system across the nation and consideration of public policies, like state renewable energy standards and greenhouse gas reduction mandates, in electricity system planning and infrastructure decisions, among other systemic reforms.  This mammoth effort to reshape the current national electricity system is still in progress but should pave the way for significant progress in managing the energy system transformation and transition beginning to unfold around us.

The departure of Jon Wellinghoff from FERC does not have to mean the end of progress on all of these fronts.  FERC has maintained a collegial and effective decision making process that cuts across party lines (which is a pretty stunning thing to say in 2013 about any institution with a mix of Commissioners from the two main political parties).  Very often its decisions are unanimous or feature a very focused and specific dissent from one or two Commissioners disagreeing with some specific aspect of the decision but accepting much of what the majority are doing and saying.

This uniquely effective institution will maintain its balance and continue to make progress if Ron Binz, the nominee proposed by President Obama to take over as Commissioner and Chairman of FERC, is confirmed by the Senate.  Mr. Binz is accustomed to working across party lines as he comes from the quintessentially “purple” state of Colorado where he had a solid record as a consumer advocate, chair of the state utility commission and energy expert and innovator.

We are in a time of change and challenge: coal plants are retiring and the United States shows signs of finally getting serious about using energy efficiently while reaping the power of the wind and the sun.  Such times call for steady leadership at the essential Federal energy regulatory body.  That is what Jon Wellinghoff has shown – and it is what Ron Binz can provide going forward.

NU/NStar & FERC Order 1000: Our Shared Energy Future

Mar 22, 2012 by  | Bio |  Leave a Comment

A few weeks ago I attended a conference in Washington, DC that brought together environmental groups from all over the country. In speaking with my colleagues, I was reminded of how this country is a patchwork quilt: each of us brought a unique set of challenges, a strong independent sense of identity, and solutions to regional challenges – solutions that are sometimes adopted at the national level. This certainly is true of New England.

Over the last year, two events have emphasized the importance of interregional coordination. In the process, they have reminded me of New England’s long history of regional cooperation to advance nation leading clean energy projects, and of the way in which those have been adopted on the national stage.

The first of these issues is FERC Order 1,000 – a significant reform to the Federal Energy Regulatory Commission’s position on “electric transmission planning and cost allocation requirements for public utility transmission providers” issued in June of 2010. That Order, and material explaining it, can be found on the FERC website. The new rules announced in that Order mandate that utilities operating wholesale electricity systems across the country engage in a process of regional planning. Here in New England, we have been doing that for as long, if not longer, than anywhere else in the country, so that part of the order will prompt new regional innovations largely elsewhere in the country. Another part of the order instructs regional operators of the electric grid to consider the public policy mandates of the states in their region in the planning they do for their part of the grid. The New England states have a variety of innovative policies intended to bring about a clean energy future. How our regional grid operator accounts for those in its planning is very likely to break ground for the rest of the country.

Similarly, the recent breakthrough settlement agreement by the Patrick Administration in the proposed merger between NStar and Northeast Utilities also reminded me of the need for regional coordination. Consider the scale of the proposed utility: As The Boston Globe reported, “the proposed $17.5 billion merger… would create the largest utility in the region, [and serve] nearly 3.5 million electric and gas customers from Westport, Conn., to Pittsburg, N.H., near the Canadian border.”

With a reach extending from southern Connecticut to Northern New Hampshire by way of Boston, the resulting utility has obligations under a variety of critical state policies intended to protect the environment and build a resilient clean energy economy. The right to operate as a state-sanctioned monopoly is conditioned on the utility meeting those obligations. The initial terms of the proposed merger did not meet those requirements; the merger as revised by the settlement, as my colleague Sue Reid said, “ensures that this powerful new utility will be in lockstep with Massachusetts’ nation-leading clean energy policies and propel the state forward instead of backwards in implementing them.”

This cases highlight the need for advocacy groups to be able to field their teams  on a scale and in a manner that that rises to the challenge of the moment. The NU/NStar merger required us to play on a regional scale; FERC Order 1,000 provides a chance to use the federally regulated planning process to advance critical state policies that are designed to build a cleaner and thriving New England. The challenges we face, and the institutions we engage (like utilities), are large and extend across our region and beyond, not respecting traditional boundaries. CLF must meet this challenge with size, scale, intentions, goals, and strategies that are appropriately sized to meet those challenges.

Given New England’s strong tradition of leadership on energy and environmental issues, I have confidence we have the tools required. However, as my conversations in DC emphasized, what is appropriate here in New England is not appropriate for every region.

Given the differences between the various regions of the country, and various areas within those regions, I wonder: To what extent can we successfully plot a common future? These questions are as relevant within New England as between regions.

Driving south from Acadia National Park in Maine or Hanover, New Hampshire, or east from Springfield, MA and Hartford, CT the scenery changes, the weather warms and the population becomes more dense. Though each place is in New England, each feels very different – and, if you ask someone on the street, chances are they’ll tell you just how unique and independent their town or city is. The same is true as you travel north from Atlanta or NYC to Boston, or east from Chicago or San Francisco. Within New England, as within our country, our differences can be easier to see than our shared future, but it is the latter that requires our attention.

More and more, we have the tools. That puts us in a good position to work together, town by town, region by region, for a thriving New England, and a thriving country.