I'm your host David Roberts. It has been a pretty exciting term at the federal energy regulatory commission as these things go. Firk has a reputation as a somewhat state and slow moving agency, but recent years have seen it begin to take a more active role in the clean energy transition, issuing major new rules on regional transmission planning, grid interconnection, cues and distributed energy among other things.
Allison Clements, a long time environmental law and regulatory expert, has seen all this recent action up close. She joined Firk as a commissioner in December 2020 and stepped down when her term ended this summer. In between, she read thousands of public comments, wrote dozens of opinions argued over numerous pipelines and consistently pushed for more aggressive grid reform.
Since stepping down from the commission, she has mostly been laying low, so I am thrilled that she's come on Volts to chat about her work on the commission, the future of the grid and what better regulation might look like. With no further ado, Allison Clements, welcome to Volts. Thank you so much for coming. It's a real honor. Thanks David. It's nice to be here. I hope you've had a chance to lay on some beaches or sleep late.
A little bit of that. I've mostly been chasing kids around, but I have had no trouble removing myself, so I've enjoyed it. I'll start with a general question. Numerous times over the years, you have expressed a worry, I would say, basically that the grid, the energy system, the US energy system is changing very quickly in some pretty fundamental ways. And the US regulatory apparatus is not keeping up, basically, it's not moving fast enough to stay abreast of these changes.
In your four years on the commission, now do you worry about that more or less than when you started? That the great place to start, and I think I worry about the same, which is a pretty high amount, even for a worryer like me. We start with the place in these conversations that the transmission system, the electricity system, is the backbone of the US economy.
It is not just about climate, it is about our national security, it is about our international economic competitiveness, it is about cost for customers, it is about resilience as whether patterns change. Think about the system we've been running for the last, let's say, 50 to 100 years, it's increasingly old, clunky, and outdated.
But in the process of trying to keep cost low for customers, we haven't moved, kind of made that capital investment sufficient to then keep saving customers money over time. So yeah, absolutely, there's lots to say about that regulatory structure. The starting point is, kind of we're at this generational moment where the actual infrastructure is not up to the challenge. Yeah, and I want to get back maybe a little bit later to some reforms of FERC itself that might help improve that.
But let's talk about a few specific areas. First, one of the big orders that came out of FERC while you were there, order 2023, was addressed at these interconnection cues, which I think everyone in clean energy now is at least aware of. Basically, we've got more clean energy waiting to connect to the grid.
Then there is on the grid, and it's just a trickle at best that is actually getting hooked up. So FERC decided to take this on in a rule that mainly sort of urges utilities to instead of studying each new project in line one at a time. At a cost of two to three to four or five years each, you know, maybe you could study several new projects in a cluster. You could do these cluster studies and maybe connect several projects at once, which is not nothing.
But when you wrote your concurrence on that rule, you mentioned that there are quote more fundamental issues that have been sort of left unaddressed by this ruling. So what do you mean by that? What are those fundamental issues? Sure. And this is the example of your first question, which is that regulations take a lot of time to make at FERC when the commission decides that there's an issue like this jammed up interconnection cue that needs to be investigated.
We go through legal processes of rule making proposed rule making and comment that takes a long time. So we started this effort at the beginning of my term and did the effort at the end of my term.
And we're still, you know, we just let the horses out of the gate. We have not crossed the finish line. So what happened was we looked around the country and we said, wow, you know, there's 2.6 terawatts of generation waiting to hook up to the grid that can't get on 90% plus of that is wind solar storage. That's what's happening in the world. The commission's job is to facilitate what's happening in the world affordably and reliably. But that interconnection process was never set up for so many.
Yeah, you know, projects trying to get online for big once every several years fossil fuel plants, you know, exactly closer to load coming on at a much slower pace. Yeah, kind of better understood how the operations will affect the system traditionally. And so what happened was everybody just got overwhelmed fast forward to 2022, 23, you look around the grid and you say, OK, the utilities aren't waiting for fork to act utilities around the country or trying to fix these log jams themselves.
And so first said, what are the practices these utilities are doing around the country and what's working and we saw this cluster study idea we saw this idea that you know some of these projects aren't serious right they're just putting in applications to see how far they can get. How do we weed that stuff out well let's make them pay let's let's make them you know show show that they are commercially ready to hook up to the grid.
Let's make them pay for studies to get on to the grid let's make them pay if they drop out of the line that puts more accountability on the interconnection customer. We also said, hey utilities get those studies done that the customers are asking for get them done by deadlines and created a kind of a payment incentive for utilities to speed up as well.
So what we did was we made a strong baseline it's nuts and bulls improvements it wasn't modernizing the interconnection process it didn't fix all the problem but it said hey as a starting point we have to get out from underneath this kind of just ill suited process and let's take it from there that's where my my concurrence comes in.
You know one thing is kind of a invoke these days and clean energy circles to talk about is the kind of Texas approach to the interconnection q which is known as connect and manage just for listeners who aren't familiar it's complicated but but the capsule summary is instead of doing a full study of how the plant would operate and how it would affect the grid and whether the grid could accommodate it you just go ahead and connect it.
And then if the grid needs to shut that power plant down for whatever reason for safety reliability whatever it just will so in a sense the power plant is taking a little bit more risk but it gets hooked up a lot faster would you support that kind of connect and manage approach everywhere and do you think forks should have a say and and whether utilities use that.
You know using everywhere is always dangerous but I see that what's happened is wild these resources are waiting to get hooked up these upgrades to the grid have to be made these network upgrades so that the resources have you know what's called capacity a room network service on the grid.
But they don't have to have that you could hook them up and just say okay you know we have congestion today you're getting curtailed right and then as they're already hooked up in and producing electrons the network upgrade process can continue so yeah it's a really good idea it's worked in Texas you know people have opinions on the specific nuances of one approach versus the other but this connect and manage or this focus interconnection is a really important and promising idea and it's one of the many ways we can start to make progress.
You know now that you're not on the commission and you're free to just sort of free to let your imagination run what else do you think forks should do on interconnection like if you were clean up for a day what what do you think would get at a more fundamental fix. Yeah I'm unburdened by what has come before exactly you just fell right out of the coconut tree so let's.
You know there's so much talk about the power used by advanced computing and by artificial intelligence but what can those things do for the grid yeah you know there's opportunities to use these kind of advanced computing cloud platforms to automate processes to be able to study scenarios and impacts on the grid any given solar project or solar plus storage or you know gas plant whatever you name it.
The impact that might have can you imagine a world where you could you enter sort of a standardized in or connection agreement and you use modern technology software to study what might happen on the grid and then you can hook up in a month because we figured it out that is technologically possible but operationally we're not there right.
There's conversations in the great planes region and s pp about how we might get more certainty up front for generators and say it costs x dollars per megawatt to hook up to the grid so if you're a hundred you know you know it's this if you're 250 it's this pay it and let's go yeah give them something to plan around because right now it's really like a it's just like throwing dice it's like a lottery when you get in that queue you have no idea what you're going to run to.
That's right you just know that's not going to turn out you think it's going to. How to make more room on the existing system how to take advantage of cocaution how to use surplus interconnection rights there's a whole lot of opportunity but again the regular process grind slowly and and it's keeping those things moving that's important.
To your knowledge like is fork like are they some you know intern in a basement somewhere chugging away thinking about further interconnection stuff or did you just kind of cross this off the list for a while absolutely fork has such great interns but also really strong experts and they just held a workshop a two day workshop what comes next.
I think the regions aren't waiting for the commission right now and they're taking next steps into their own hands it would be nice to see this commission take next steps and do it quickly to kind of.
You know everywhere you go right now people are talking about interconnection there's all these companies who didn't understand their computing companies their dance manufacturing companies they didn't understand they were energy companies are power companies and now they're learning about what are kind of these irrational very to to entry that that make it just really urgent to get going on this stuff soon yeah well let's talk about the other big great issue I guess they're multiple but one of the other big great issues that everyone is also.
Talking about namely transmission so you know the basic situation which I'm sure you're deeply familiar with at this point I guess almost everybody now at least in our world is familiar with this which is just if you have more renewables location matters more and you need more transmission you need more long distance transmission to carry the power from where it's going to be generated to where it's going to be used and we are in this country in.
Incredibly slow and not particularly rational about where we build transmission we don't you know it's sort of catches catch can based on individual utilities and there's very little in the way of broad planning even though this is a system and a big system you'd want some planning so
for jumped into this also took a long time also a lot of arguments a lot of public comments but you issued this rule 19 20 big rule on transmission planning and so the main thrust of that rule was a utilities have to do these 20 year plans so they have to they have to plan which is like you know as I said on this pie before it's a little remarkable that a regulator has to force
a utility to plan its utility area it's a little crazy but nevertheless there it is they have to plan now and they have to take certain benefits of transmission into account when planning just like on its face how sufficient is that rule to the need or do you think that also is just kind of cracking the door.
I think it's a lot more than just the starting point so the idea that utilities should be working together with their neighbor utilities looking forward 20 years using scenario planning with the best available data to say what will the interconnection keys look like in 20 years what do electrification trends mean in industry and buildings and cars you know what might gas prices and commodity prices look like we don't know the answer any of those questions but if you take scenarios and start to harness an uncertainty.
There's a lot a lot a lot of low regrets big regional transmission that needs to get built and that is regardless of what types of resources hook up on the other end right you know LBL put out a study they did analysis from 2012 to 2021 the updated it again in 2022 but they looked at the
location of marginal price values of transmission and you know 2011 to 2021 wasn't the time of massive renewables integration and their analysis demonstrated that for every gigawatt of transmission investment it's about a million dollars a mile for transmission as a rule of thumb every
gigawatt transmission will pay for itself somewhere between five and 10 years over and that is simply by lowering bulk system costs right that savings that has nothing to do with the type of resources that are hooked into the grid so let's look forward 20 years and build this stuff let's not build too much let's not build it cost
in effectively let's optimize across costs and let's optimize across impact the only way you can do that is to do these forward looking planning and it is kind of shocking that this hasn't been happening for the last decade it's just like every household plans they plan for budget for Christmas they plan their budget for spring break vacation we weren't requiring that as a regulator of the utilities what what do you think about the idea that you know utilities
that's investor owned utilities make money by spending money so if they get together in groups and plan and build a transmission system that maximally sort of shares power across the region and lowers costs that's great for customers but it's not necessarily great for utilities it it lowers the need to invest more in the
budget there by lowering the amount they can spend there by lowering their returns in other words this as in many areas it kind of seems like what's best for customers is counter to the utilities financial
interest do you think that's a play here I think that's a play a lot of the aspects of utility planning when it comes to transmission this really is a win win in terms of the ability of utilities to spend money on transmission which can lower costs of new generation can provide access to other lower cost generation and other regions and so in this case of course there are questions and any given situation but the opportunity is there for every
time the same side the question that our rule did not answer and is one of these existential questions about why transmission hasn't gotten built over the last decade is a question of competition whether or not utilities should have to compete with non utilities or other utilities to build this stuff and that's a question that this rule didn't answer and it's certainly an important one relative to if when and how this stuff gets built.
I asked about that because you and commissioner Phillips in your concurrence said that you were willing to give utilities back there what's called right of first refusal or a rite of first refusal which basically just means that they get first cut at any transmission line and that if they have that right of first refusal that basically kills competition because it just puts
them at the permanently at the front of the line so I'm wondering why you thought it would be a good thing to give them that right of first refusal back. We did not actually give them that right of first refusal back we left that question open there is another document the commission where that question may or may not get answered by this new set of group of five commissioners.
You're thinking about an industry that's heavily regulated there are few industries telecom you know and others that are similarly regulated and you've introduced competition in 2011 the commission introduced this rule called order 1000 and it said regional transmission has to be subject to competition.
And so what happened was this isn't this isn't over simplification and I readily admit that but what happened was utilities lean towards building the needs of their own systems within their own footprints that weren't subject to competition or that were needed for specific reliability purposes and therefore not an exception from this competition rule. That's not to say they're not willing to compete but they there had been you know a de emphasis on the competition part.
It sure seems like they're avoiding it sure seems like they're doing everything they can to not let competition happen. You know I'll be honest it's hard to go halfway into it's like you know jumping halfway into the water right we've got we said okay half competition but not in all cases.
And the commission has the choice to double down and say eliminate more opportunities for competition or to say hey can't beat them join them let's provide the right incentives to the utilities to get the goods of done. We live somewhere in the middle right now and to me you know it's like hey these are the rules you know we took four years to get this rule out we took on as much as we could as a commission there was a lot of compromise and balls and getting it done.
Go try and win by playing around these rules you know there's one thing I learned when I was in project finances that the developers will live whatever the rules are as long as they have certainty around the rules right.
Yeah and I think the utilities that want to ensure this right a first refusal you know fair enough they keep fighting for that interest and they they have a responsibility to their shareholders to do so but at the same time go compete figure out a way they've got the right of ways you know they have lots of advantages perhaps not all in the capital markets but they certainly have some.
And so let's go see what we can do now that we have this rule out there what do you make of the argument of your republican colleague that this requirement that a states utilities sort of get together in a group and do this shared planning.
Basically the argument is this forces states that don't have clean energy policies and don't want clean energy policies to basically participate in and help pay for the clean energy policies of states that do have them basically like socializing these costs you're drag hooning these unwilling states into this process what do you make of that argument.
You know this is not just my republican colleague it's a perspective shared by states who look around and say hey transpissions getting expensive but you know as I started the reality is new transmission brings benefits to customers to everybody on the grid from a reliability and economic perspective period we are very far from the point where we're going to start worrying that you know a penny spent is a penny lost related to all customers getting benefits from transmission so to me.
What we did in this role is give states an unprecedented seat at the table to say hey we don't think that that particular line is going to help our customers because of serving that other states policies great stipulated you shouldn't have to pay for that line but if that line is the most cost effective way to bring the economic benefits to your state that will reduce you know the transmission component of your customers bills why wouldn't you get on board with that.
The no transmission line provides only one kind of benefit to customers and I think if we strip out the politics and say we have a generational need for transmission investment our grid is not supporting our economy it's not supporting our communities.
I mean we haven't talked about hurricane holine but the reality of these terrible terrible incidents that are taking place seems to me that if I was a regulator who's governor had my cell phone number I want to be sure I was doing everything I could for to make sure that my communities were safe in the face of of these storms that their bills continue to be manageable relative to this reality of the need for new investment and that you know advancement manufacturing facilities were choosing my state and not the state next door because there wasn't any room for them on the grid.
Yeah well ideology can make people stupid one of the real hot button issues here one of the things that people struggle with I think even in good faith struggle with trying to find the right answer is just the best way to share costs of these things it's difficult to pin down with precision sort of exactly who benefits there's some fuzziness there so aside from the constraints of the rule and the command.
What do you think is the best way to think about cost sharing for these big cross utility sometimes cross state transmission projects. Yeah the reality is you know if you think about how the national highway system got built there's lots not to emulate there right but the federal government because this development of this highway system was in the national interest used federal government funds to pay for the development of the highways right.
Local home economy and say yeah I don't want that going through my state I know I couldn't say yeah like I 90's not for me but that highway system formed the basis for the US economy now we're at you know the next technical revolution and the electricity grid is that highway system but in this case the customers you me and companies and businesses pay for this new investment on our utility bills so the concern is fair it's understood.
But the best example that I always come back to is the multi-value project lines in my so the Midwest regional grid operator those lines got started because a bunch of governors a very different political stripes got together and said wow there's a lot of wind coming in to the Midwest and we think we could all take advantage of this low cost resource there's also a lot of need for economic savings on our transmission system so let's figure out a way to develop this backbone set of lines and do some rough justice.
We will all try and figure out roughly how much we benefit and everybody will be allocated the cost of those lines based on that that rough justice and those lines are the gift that keep on giving when you look at what happened in winter storm Yuri in winter storm Elliott those lines probably paid for themselves each time over by being able to interconnect regions provide redundancy and keep the lights on so I don't know of a case where analysis of the benefits over evaluated the benefit of new regional.
We always underestimate the value of these always always and that's why I think there is an opportunity for everybody to sit at the table together and get away from this question of whose policy cause which electron of flow.
If transmission especially long distance transmission is sort of a natural monopoly why do we have profit making companies involved in it at all why don't we just approach it the way we approach the national highway system i.e. do some national planning build it out with federal tax money until states what we told them when we were running i 90 through them which is like tough.
This is happening you know we're doing this why not well why are we still mucking around with profit making companies at all you know David I know you you like the west coast better than the east coast but you spend time in Washington DC we operate under divided government that's it's where we are.
But if you were queen like if you were in charge does that make sense to you yes absolutely is the electricity system the critical component of this nation's prosperity in the next century yes you know I think about the military bases in North Carolina in Tennessee whether they lost power what operations they were running and I think about you know the amount of investment the China's making and its grid it has you know plans for seven years.
So we're going to have a plan for seven hundred to eight hundred billion B dollars over the next I forget if it's five to 10 years if we want to maintain our role in the world we have to be doing this that to me is the pinnacle of national interest you know that's not where we are today and so to my mind we need political will at all levels right we need.
We need governors we need county commissions we need Congress we need everybody saying this country has to want to start building stuff and we need to do it well we need to be cognizant of the communities that are going to have to take in this infrastructure but you know yesterday was too late and so absolutely in a perfect world we'd be doing that money for this stuff.
What do you think needs to happen next on regional transmission there was some stuff about grid enhancing technologies which you know done couple pods on here at volts I think the order said basically just that utilities need to be cognizant of them and calculate their value what do you think that's enough.
On great enhancing technologies or you think more is needed there it's a start it's a compromise and I'm proud that we got something done related to that in the regional planning rule and also in our interconnection rule but there's a lot more to do there you know one thing we haven't talked about is we talked with the general inability for regulation to keep up with where the markets want to go we haven't talked about the fact that these particular rules 19 20 which is the transmission rule in 2023 which is the interconnection rule they will take time to bear fruit so if you think about.
Order 1920 regions comply it will first just get a little bit of it then regions are complying with the rule and then they start planning together we're talking about 20 29 when lines start getting chosen what do we do between now and then.
We have a whole lot of opportunity to create new room on the existing system and that happens in lots of different ways using hardware and software which we call grid enhancing technologies re conducting or other advanced transmission technologies that can double the amount of renewal.
Of renewables we could integrate on the grid today without material new transmission right right now if you are you know chips manufacturing facility who just got a grant from DOE trying to move into a state but there isn't room on the grid according to the rules even if physically by the laws of physics there is indeed room to be on the system those are the kinds of things that we need to be solving now so that we have opportunity
while the suite of solutions that are regulatory take time to take effect. Yeah it seems like it would be cheaper for Microsoft rather than spending 1.4 billion dollars on a nuclear plant.
You could probably spend like a third that much on grid enhancing technologies and just boost the capacity of the grid you're on you know I bet these AI companies would would help pay for that even if it was available as an option you know I think there's competition in the ability to own and procure generation with the largely stone monopoly state of the transmission lines it's the utilities themselves that need to deploy them on their systems.
Yeah yeah so this is all about regional transmission planning which is a big deal but then there's also the even maybe stickier question of inter regional transmission planning or I guess you just call it kind of national transmission planning I wonder what you think FERC can do on that without Congress you know with its existing powers or do you think Congress is going to have to step in and sort of change that situation what's your take on inter regional transmission.
Sure as you know right now there is slim to none when it comes to inter regional planning there is none now creating some at all would be a good step. That's right the Department of Energy puts out good studies the labs put out good studies on the seams but there is no required inter regional planning FERC has the jurisdiction from my perspective quite clearly to require inter regional planning in the same way we have required long term regional planning
but the question is both structurally and politically can the commission do that and do it in a way that is strong without congressional direction so of course we now have the mansion for also permitting package which is being batted around Capitol Hill and that legislation contains really the requirement that the commission
is established a really strong inter regional planning rule does it sure does interesting so that would trigger basically a rule making at FERC you think or something along the lines and this would be RTOs basically coordinating with other RTOs I mean is that how it would work or would FERC itself like do you need a national governmental agency you know sort of in in the room there with that planning.
As is envisioned by I think most stakeholders at the commission who've been thinking through this this question and also by Congress FERC would issue a rule that required each utility and in the case of the RTOs and the RTOs and the RTOs and the RTOs and the RTOs are on behalf of their member utilities so it doesn't matter if you're an RTO or not there would be some requirement to establish joint planning either resulting in one plan or compatible plans
separate compatible plans with neighboring regions which could be another RTO or it could be a non RTO utility region which also exists outside of the RTOs in both the west and the southeast.
Yeah well who knows if that will ever pass but it would be interesting I want to touch on distributed energy I think you'd call it like the other side of the coin from transmission we need a lot more regional and inter regional transmission to move things long distances but we also need I think by common agreement lots more coordination and just making sense of the profusion of local energy basically local generation
storage distribution things like that so FERC has taken a couple of swings on this order 841 was about integrating storage into these regional markets and then ordered 2222 2222 222 which was a pretty sweeping order that basically mandates for the over seers of these regional markets RTOs and ISOs to allow aggregated distributed energy resources into wholesale energy markets basically
that's right so I guess the two questions one is do you think because order 1000 before this was kind of about a similar thing and I think sort of the general view is it didn't really work like it just not really working like you wanted so what do you see is kind of the efficacy of 2222 do you think it's going to work and just generally I'm curious on your take on distributed energy resources and whether integrating them in wholesale markets is the only the best way of supporting them
absolutely well I want to get back to your the way you set up that question which is the question of yes we need new transmission and these distributed energy resources you know Princeton is projecting 2.4 to 3.8% a year load growth over the next 10 years we need to be firing on all cylinders we need
everything from the cheap easy near term stuff like harnessing demand side which isn't easy but it's easier like using good enhancing technologies all the way up to building the big more difficult transmission but when it comes to distributed energy resources one of the kind of
the numbers of my term was that this rule was in the compliance process for the entire time I was there we I issued an order I think it was on nicer right before the end of my term and so from 2020 to 2024 we were still in the compliance days which meant that we couldn't talk to stakeholders about anything that came close to
the beginning of the process and then we were looking on the participation of distributed energy resources in fracture a sectional processes because that would have been exparte so there's been kind of a lack of communication around whether or not this is working and what the next steps are
going through the paper filings and the comments that we've got from stakeholders now did order 2022 do has it done or is it going to prove out all it had hope to do I say to results are looking moderate there are still questions about barriers from distributed energy resource providers in various regions to
participate in any RTOs market but it's possible again we're taught we have it's not a technology question as much as it is a coordination and an operational question as well as the political will question in Australia where we we learned a lot about distributed energy resources they're going to count 30% of the entire country's capacity
yeah it's wild rooftop solar by 2030 effectively rooftop solar cheap as hell there right and it's not political there right it's like it's becoming but it was like you know I cut coupons before I go to the grocery store I wait till the day that the gas goes on sale and I put solar on my roof all because those things make the money that I spend lower right but that's not where we sit in the United States and so the demand side
opportunity is tremendous and I you know I feel like I have been advocating for the same thing for the last decade which is to take advantage of it and I'm not sure how much progress we have made but again this new era of low growth hopefully opens up an opportunity to say we can do all of this stuff we can do this stuff that is capital intensive and creates new
right base and we because there is so much of that to do and because there's an obligation to protect customers we can also take the next steps on deploying these distributed energy resources into the markets the cynical take on it is that utilities are fighting this because they don't own the distributed energy resources
in so far as distributed energy resources are well coordinated and used effectively they reduce the need for additional grid infrastructure which again hurts the financial returns of the utilities so the
cynical take on this is just utilities don't want competition from local energy in there therefore fighting it and dragging their feet in every way they know how is there a non-synical take on why utilities are going so slow on this well Alison's red colored glasses take on this is that you know this is a new
technology for sure there are financial incentive misalignment and that is something that the state regulators and for can work to improve in fact we have the opportunity under section 2 19 of the federal power act to provide incentives for advanced transmission technologies now what falls into that bucket we can talk about but from my perspective I think we're not wholly satisfying that obligation today I keep saying we it today now which is it's lovely but but there is an
opportunity there right but there are concerns about reliability and about operational transparency and the ability to understand from the grid operators perspective whether or not those resources are going to show up I think those are all solvable problems and sometimes you had it's hard to get all of the right people in the same room because of the different jurisdictional pots that are pulled from and this opportunity for the rose colored
piece is that utilities are feeling a fear of this low growth as much as they are excitement this is a huge challenge yeah it really is like it's forcing like doing nothing is is no longer an option for any utility anymore right this is a little speculative I keep asking you to be speculative but sort of on the DER front on the distributed energy resources
front I just personally have trouble believing that aggregating them and allowing them to play in wholesale energy markets is the best and final way of encouraging them and I wonder if you think something more fundamental is needed so a lot of people you know these days talk about a kind of layered grid where you have local energy markets local trade
and distributed energy which then sort of aggregates up into wholesale markets and you know so you have distribution you have DSOs basically the local equivalent of of I SOs and RTOs what do you think about that do you think we're moving in that direction or do you think kind of just playing in wholesale markets is going to be enough
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what do you think about that do you think we're moving in that direction or do you think kind of just playing in wholesale markets is going to be enough I don't know the right answer to that question I don't know what a refreshing answer there's a lot of things I don't know I do a basis and that's maybe Lorenzo Christoff's kind of perspective someone who taught me a lot about what I know about the grid and is so visionary
I'm in a moment of coming off a term you know where we had people with different political perspectives on the commission there was a lot of compromise involved and so perhaps the realist side of me has become stronger in terms of the the amount of resources and cultural shift and change that would be required to turn this super tanker of the energy regulatory system in time to face the challenge that we have in the next five years
that feels very hard so if I was starting from whole cloth I think that is a very efficient smart and technologically possible way to run the electricity system and energy systems going forward are we there today in restructured states that have been more open to this idea let's lean in but we also should understand that the battle will be long hard and I don't know if it's winnable in some other parts of the country
well said so speaking of sort of different regions with different politics and different you know energy mixes I just wonder sort of just on a big picture scale which regions do you think are kind of doing best and worst here in terms of managing the energy transition sort of like who are the kind of leaders and lagers here you're you're allowed to call them out now since you're not on the commission anymore
I'm throwing tomatoes is not my specialty I am very bad aim you know I'll talk about a region that I think is doing so well relative to the challenge and I lived out in Utah for five just over five years and kind of adopted my heart adopted the West as my home and the regulators in the West are trying really hard
they organically have been coming together you know for decades there's been conversations out there about the development of markets and what that might look like and there's you know a lot of blood sweat and tears left behind relative to those fights but we've had a couple of states in the West require their utilities consider joining our
studios we've had state regulators across all of the states really engage on the question of what is a NARTO that serves my state's customers well look like and how do I get engaged and so now there's a bit of a competition if you with the wrong word but there's there's two big RTOs that want to play in the West right so in California and SPP had a little rock and we're seeing utilities start to commit one way the other so to me the the
Domino's are starting to fall in terms of what that's going to look like and I don't know how we meet the challenge of the energy transition without you know the development of markets not not necessarily yesterday's markets markets that have evolved to both provide the services that a grid needs with a new set of changing resources as well as protects customers along the way.
I mean the southeastern power pool or whatever half-ass thing they set up down there is not not anything to celebrate do you think the southeast do you think in some sense is inevitable that they're going to have to do a market down there that they're going to have to have an RTO down there do you think they're just going to hold out forever they're just going to be old school vertically integrated monopolies forever and every man.
Let's note for the record that you did made that description not me I like throwing tomatoes I have been a vocal critic of the southeastern energy market I think that's the sea mix change yeah see I'm sorry there is and I don't think that it has to be the case that the southeast establishes an RTO tomorrow but I think whatever market mechanism any region and this has happened in the West in the western energy and balanced market out of kaisa which has saved customers over.
I think five billion dollars since its inception in 2014.
Whatever market mechanism gets created needs to be non discriminatory at whatever phase of the market development is at so doesn't mean you have to have a full blown RTO tomorrow but if you're going to start trying to save customers money and by the way if you're going to satisfy your responsibilities under the federal power act there's a lot of money on the table when you're not when you're not participating in those those markets and achieving those efficiencies then we're not going to be able to do that.
So we'll see how that plays out you know the hurricane again not to suggest one requires the other but when you think about get past the loss of life and damage when you think about the power system there and how we're going to maintain resilience in these really unexpected weather situations there's going to need to be an integrated grid that is bigger than those weather patterns and so we'll see what happens.
So it's horrific obviously what's happening down there but it is also an opportunity I mean Duke basically came out the other day and said in a lot of these areas it's not about repairing the system we're just going to have to rebuild from from the ground up huge chunks of this system so it'd be nice if they you know did it better
build back better you might say after this the one other thing I wanted to ask regionally because a bunch of people wanted me to ask you about this maybe don't have anything to say about it but it's like is Texas going to be independent of the federal grid forever or do you think the operational and economic advantages of hooking up with the rest of the grid are eventually going to overwhelm the ideological resistance what's your prediction on Texas.
So obviously there are benefits to interconnection and when you are able to interconnect a system that is wider than a weather pattern or an extreme event or has very building the time of days a wind and solar can balance out peak periods you're going to be better off customers are going to be better off so I'm certainly not going to leave the charge myself to break down the barrier
Texas but it's hard to deny it's hard to deny the benefit of increasing connections. Yeah yeah okay well let's talk about natural gas then so a lot of people in my world are sort of perpetually irritated that when it comes to natural gas pipelines basically just propose them to
work for it says yeah we're doing that and the land owners and the states involved don't really have much say in it for can just you know sort of imminent domain yes put that pipeline there and then obviously when it comes to high speed or long distance transmission whole different world every land owner can stop it every state can stop it every entity involved and there are dozens practically can stop it and for cannot just pounded shoe on the table and say you're building that.
And everybody just get out of the way one of the main points of contention is whether or should be taking climate change impacts into account when it is assessing proposed natural gas pipelines you think it should and I think have argued repeatedly that it should I think other people on the other side argue that's not in our remit that's not so much
that's not something we're obliged to do by law that's not something we're allowed to do by law. So I guess two questions one is do you think under fernks existing authority it has the authority to consider environmental impacts in these things and then if it doesn't like should it should Congress do something like how do you think
fernks approach to natural gas pipelines ought to change. Yeah that's a big question very big and I do want to come back to this question of the difference between the federal power act and the natural gas act as relates to this but to answer your questions I have spent a long time actually trying to explain to people that
that fernks is not a climate regulator the fernks is an economic regulator that the federal power act is a consumer protection statute at heart and that our job is to protect customers and reliability you know that's an ever simplification but to protect customers and reliability whatever is happening in the world.
Right under the natural gas act in the determination of whether not a pipeline is needed both the commission and courts have said that environmental factors should be balanced in determining whether or not a project is needed and I believe that both under the determination of need of the natural gas act as well as under our neap analysis because when we approved these applications trigger environmental review we need to consider environmental impacts what is the biggest environmental impact right now.
The release of greenhouse gas emissions and so the idea that we wouldn't take that into account is counter intuitive to me and there is such an ideological allergy to the reality of climate change you know protruding into or leaking into or sneaking into first decision making process that we have I think lost the middle where I think we were when I started the commission which was a pass towards compromise on this question. So you think it's got more polarized over the over the.
I do I do well there was some updated policy guidelines along these lines announced in February 2022 only to be retracted in March 2022 after what I think can fairly be characterized as a rather heated assault on those guidelines by our old friend Joe mentioned what was in those guidelines and why did they die.
I remember those months very specifically as does my family you know we're looking back at that time we put out a proposed policy to modernize the commission's natural gas policy this policy goes back to 1999 it's really old it may be the if not one of the it is one of the longest standing policies and this was written before
fracking even existed and the state of the economy the drivers of the economy the penetration of gas into the electric system was just orders of magnitude different right needs updating and did we do everything in the way that made the most sense and we released it the day before Russian
data the Ukraine the update of policy and there were a lot of things that happened around that certainly a lot of lessons learned but the thing that I thought was important then and think is important now hasn't changed and that is this question of need to your point if an applicant for a new pipeline wants to get it permitted and cited by the federal energy regulatory commission what they need to demonstrate is that they have an unaffiliated transporter right so the person they need a contract or more than one contract that represents
desire for some high percentage of the capacity of that right just to demonstrate that the line is needed that the market wants the line that's the test now some pipeline companies go beyond that and they produce market studies and submit those with their filings but fork does not engage in a rigorous analysis of need and to me if they started to engage in a rigorous
analysis of need and we would be closer to satisfying the language of the natural gas itself the statue which says you know if the pipeline is in the public interest it shall be approved if not it shall be rejected and so it anticipated this question do we need this pipeline and if we need this pipeline then let's deal with the environmental impacts of it but if we don't need it we should be stopping there right but it's I mean has
been a work ever ever rejected by natural gas pipeline I think a couple of times not sure my term I mean whatever it's decided the public interest is it seems pretty automatic that these things get approved now but you did vote against several individual pipelines was that based on need or was that based on environmental impact both depending on the case and actually we've just gotten a couple of court cases there's one pipeline in the northeast there's another
thing litigated in the west and the one in the northeast the states objected to the development the pipeline and the courts found that for didn't this is an over simplification the court found that for didn't take a strong enough look at me and that there were these states coming in and so you know this question of do we listen to the states when they come in and they say they
don't want to pay for other states clean energy policies but then we don't listen to them when they come in and say we don't need this gas because our clean energy policies are going to reduce the demand for gas in our state so it's a complicated question but I do think it remains an important one and hopefully the commission will
will despite the you know the history of the draft policy update that got rescinded hopefully they will make progress on this issue yeah but do you think it's fair to say like I think sort of like globally speaking you could say that the commission is moving in basically the on interconnection on transmission it kind of doesn't seem like it's moving at all on this particular question do you think that's fair that things are kind of stuck around
this issue yeah I mean I've had my head in the sand for the last two months so I will see what this new commission does but I do think it's important to point out that as you said deciding and permitting for new gas pipelines and then the related ability to get an in domain authority all rest of the commission right they are the lead agency for the NEPA review and they provide the permit when it comes to transmission infrastructure there's split jurisdiction right
to forecast jurisdiction over the planning and who pays for transmission but the states have jurisdiction over the state permitting and the deciding the award of a certificate of public means in necessity and that in and of itself with no other consideration is cumbersome and you know difficult at best and so in this this permitting proposal that's going around that would give for improve vastly improved citing authority over electric transmission that would be really important
and they would it would put the electric transmission not in the same place but on more of a level playing field with gas infrastructure and say okay you know what I like to say which is let's let the markets decide what it is going to get built and so I think that would be an important change that would start to help get transmission infrastructure built.
Another kind of general question which is there's sort of two perspectives on the question of forks power I think one perspective is and tell me if I'm wrong but I feel like maybe you share this perspective which is that fork has more authority than it is using fork could
under statute could under current law be more ambitious and maybe more forceful and more whatever that's one perspective then on the other side of that is you have the supreme court being the way it is you have the chevron ruling which seems to indicate that the court is going
to come down much harder on agencies that exercise their discretion so someone on the other side might say given chevron if anything fork needs to be more cautious more timid more you know so as to not get shut down by the court so where do you come out on that question.
Yeah a couple of thoughts and I'll start with the court case and then go over to the commission structure but a former commissioner Norman Bay described forks juristic as unambiguously broad and I like that term because fork has jurisdiction over the rates of wholesale sales electricity and transmission and the practice affecting those rates and historically the framework that has developed has
affirmed that broad jurisdiction the courts have affirmed that broad jurisdiction and so I think absolutely the commission hasn't you know kind of extended the bounds of it is it's authority in any appropriate ways and has the opportunity to do a lot more like what happened in order 1920 and and what might come from order 2023 on inter connection so I am less concerned all say about the low per bright decision in a post chevron world than I would be if I was at the EPA for example.
It's not to say I won't have any impact but I think we are kind of within our explicit authority that has been affirmed by the courts for a long time so we have some structural issues of the commission so we have you know the federal power act is not long we have two main sections 205 and 206 the way that things get done at
fork is that under 205 the utilities want to change their tariff they want to change away a market rule works they want to change their inter connection practices they come in and they file 205 filing and forks has thumbs up or thumbs down in 60 days. I think 2017 there was a decision called NRG that basically said when these filings come in from the utilities fork can't modify them so much that it changes the nature of the proposal.
So it really becomes a thumbs up thumbs down so utilities can come in make these proposals and sometimes they have a lot of good in them but a little bit of bad but it's not worth rejecting the proposal over the little bit of bad that happens a lot these days if fork itself wants to say under 206 instead hey we see a problem like we did with Trent regional transmission planning like we did with inter connection we're going to go investigate that and decide whether or not
those rates are unjust and unreasonable or discriminatory and then we're going to go fix it that takes a long time and a lot of resources right and so it's hard to do that as a commission if you think it took us three years to do those two rules yeah and and that's both by structure and resource constraints were staff right people want to go home on the weekends like this small agency with the big mandate
are we just stuck with that slowness or are there structural or funding or whatever changes that you could make to firk that would make it more nimble and what would that look like yeah I think about that a lot and and people I worked with that fork thinking about that a lot there's a lot of soft power convening power appropriate
coordination with the other agencies that could be done to get at issues you know when I have these conversations with hyperscalers or manufacturing companies or their trade associations or you know people who are thinking about how can we fix these problems quickly or the to me it's how much can you do outside of the commission how much can you do without the commission's help or blessing you know bake it and then bring it to us come in and talk to us about it
while it's baking but once you file it we can't talk anymore and so I think that's one way to get around this structural barrier but then also firk can bring together do we an interior and the Department of defense
importantly I think there's a huge opportunity for coordination between the Department of Defense and the commission and you know sometimes that gets political and Congress worries about what who we're talking to I think as long as the commission is transparent and clear that it's providing
expert advice there's a lot of ways to drum up ideas and potential pathways forward outside of our our you know two or five two or six rulemaking and and proceeding process that's the best I've come up with so far what about just my old hobby horse state capacity what about just better funding for and more staff and more resources with that meaningfully help absolutely I you know I can't imagine an energy related agency at the federal or state level today that is sufficiently funded
no utility commission was set up to deal with the extent of change that has been happening for the last decade and will continue to happen for the next two right and so absolutely I think all of the senior staff of for quarter appreciate me putting in a club to whoever may be listening over on Capitol Hill. Yeah we love state capacity here at volts speaking of for procedures you took it upon yourself to think a lot about it and make changes to the office of public participation
this is another hot button topic in energy world and clean energy world there's a set of people who say especially I think around natural gas rulings there's a set of people who say for is ignoring the public there aren't enough opportunities for people to make themselves heard it's difficult for people to make themselves heard you're sort of writing heard over local objections and locals need more of a voice.
Then there's this other group of people these days the supposed sort of supply side dims the whatever you want to call them who say in almost every federal agency and every federal rule making process there's too much chance there's too many opportunities for locals to come in and stop things and slow things down and there's and it's making everything slow it's making building anything really slow and more expensive than it needs to be more uncertain and it needs to be so.
There's this sort of like split brain I think in clean energy world this ambivalence around public participation and how much is appropriate and what kind so as someone who has thought quite a bit about the office of public participation at FERC how do you navigate between those sentiments yeah well I start with FERC job is to regulate in the public interest in what the public interest without the public as a starting point that's my philosophy but when I came to the commission it was a good
moment for public participation in that this requirement that the commission set up this office which is meant to be all the a's onto the public stems back to the nineteen late nineteen seventies I think I might be wrong with this but I think it was revisions to purple in the late seventies where FERC was it to told to set up an office and and you're just now getting right getting around to it you know funds didn't get
appropriated and then I forget and then you know two decades went by and that we didn't have an office and when I came in to my role I said to chairman rich I want to lead on this you know this is something I know a lot about and I will not accept the false choice that you cannot build stuff but build it well in terms of the impact it has on people in the environment and so
the intuitive starting place for the office of public participation is these natural gas proceedings at FERC but it's much much broader than that you know these decisions that we make flow down to customers bills and it is hard to engage it's hard to engage even for resourced advocates and regulated entities so what I focused on was ensuring that we had public input on what our office of public participation should look like
which seems pretty straightforward and then from there we've had to really excellent directors Ellen cats was the first director and now Nicole said around and wow they have just really brought credibility to the office they have helped to start explaining this very you know specific
critical hard to penetrate agency to people who care about what's happening at the agency so it's gone well beyond the borders of scoping sessions for new natural gas pipelines but it's certainly that is kind of the intuitive place where it makes a lot of sense that there's a direct impact on people and communities by the commission's decisions and have you heard from the public in ways that are like meaningful that
change the way the commission decides a particular question like it has public participation been efficacious so far that is the question I think there is still more work to do I think it's an ongoing long haul I don't think we are there all the way yet but I certainly do think that the way the processes are getting done at FERC the consideration of comments the way that we explain to
interveners in writing and comments has improved and all that I'll take you know there's there's more to do and and I look forward to watching that happen isn't there a rule about compensating interveners you know because this is sort of like one of the complaints is like a lot of the people who might want to give you feedback are poor or unorganized
or don't necessarily have the technical background and don't just can't afford to take time off work etc so you know there's talk about paying them some nominal amount to compensate for their time where is that rule now is that happening there is no rule this touch-dory language suggests that the office may provide intervener fund and we held a workshop when I earlier on in my term where we had
experts come in from different state commissions who provide intervener funding so there's a nice record of information I'm wholly supportive of the concept the reality is it's a naughty issue to think about who qualifies how much to qualify who can they hire to represent them so that has not happened there's a lot of things that got started the commission that I hope will move forward including this question
of intervener funding there's a question about industry dues and whether or not customers should be paying for those we are expecting guidance on environmental justice so there's there are few things that I'm really excited about that I'm looking forward to seeing what this commission does well that kind of raises another question which I suspect you won't want to comment all that much on the list I would love to hear your thoughts which is how what's your as a
warrior what is your degree of worry about what happens if Republicans win in the November elections and then fork ends up with a three to two Republican balance do you worry about work that's been done getting undone do you worry about work just grinding to a halt do you have some hope that there's enough bipartisan overlap that things could still happen what's your level of worry about all that
less than you might think to be honest will things change absolutely I you know my philosophy on the commission is that it is our job to ensure fair rates and protect reliability no matter what's happening in the world
what's happening in the world is that you know we have 2.6 terawatts of new energy resources trying to get online and they're all win solar storage there's you know advancements being made in geothermal there's conversations around clean firm and we're on our way on the transmission front
the non energy markets the real markets supply and demand commercial customers industrial customers residential customers they don't want to go back right the transition is happening and so might we get you know a less strong implementation of some of these rules maybe but if I were you know I do believe that that
brings us back to where we start this conversation which is that transmission is about a lot more than the color of electron that's hooking up to the grid and you know the people who serve in these roles of public service should have at the very front of their responsibility what it takes to maintain this backbone of America's economy so I fear less about that piece
interesting OK final question I'm sure working on the commission for four years you learned all kinds of things about technical aspects of the grid and how it works and all sorts of questions about utility rules etc. But aside from the technical stuff I'm just curious in your four years you know this I think was your first four years in kind of the
belly of the beast government service in the federal bureaucracy just sort of curious what you learned about people and bureaucracy and and rulemaking and sort of just like did you come away from the defense depressed about the government's ability to do things or were you they do were you inspired some mix like what did you learn about federal bureaucracy in your time there in that's a big question Washington is a very very interesting place interesting so this one word you know
some days it felt like a beast and some days it felt like wow these are really important decisions and I feel really fortunate that I guess it's at the table and try and come up with answers to them I think I didn't under I
think I'm a fan of myself you know sophisticated adult when I came to take this role and I learned a lot about how politics infiltrates the entire city and and urgency not accepted but I also learned how the city works and that there are so many people here dedicated to getting things
done I learned that it's hard to be a regulated and stays hard to be a utility there is a lot of work to do you're interested and I you know was known as someone who like to be clear on my expectations about what they should do and I'm proud of that I think that is should be the role of the
regulator in this moment but I also understand more intimately I think some of the challenges and difficulties and just getting to yes and all these you know this is a long list of items I would like to to get done at the commission so interesting to talk to you I'm so glad we got a
lot of things for us and I think it's a lot of people would point to as the most exciting federal agency but it's been really fascinating to follow for these last four years in large part because you were there so thanks so much for coming on and talking through it all with us. Yeah thanks for the time I appreciate it it's nice to chat.
Thank you for listening to Volts it takes a village to make this podcast work shout out especially to my super producer Kyle McDonald who makes my guests and I sound smart every week and it is all supported entirely by listeners like you so if you value conversations like this please consider joining our community of paid subscribers at Volts.wtf or leaving a nice review or telling a friend about Volts or all three thanks so much and I'll see you next time.