Published in Real Clear Energy
And then there were two.
The abrupt resignation of Norman Bay last month left the five-member Federal Energy Regulatory Commission (FERC) with just two members – one shy of the three-commissioner quorum required to vote on major energy infrastructure policies.
FERC has now gone a month without a working quorum and the White House – with 517 nominations out of the 552 requiring Senate confirmation still to name – has been mum about potential candidates for the independent agency responsible for regulating the nation’s wholesale energy markets.
It’s conceivable that the new president is unaware of the economic significance of FERC-regulated wires and pipes – which, according to a 2013 report by the Congressional Research Service, carries energy worth $435 billion annually – but the lack of a quorum is still bad news for the nation’s utilities, pipeline companies, and consumers that rely on the agency to provide a stable and predictable regulatory regime.
It also poses a potential roadblock to President Trump’s promise to advance a $1 trillion infrastructure plan and revitalize America’s manufacturing sector, perhaps the two most bipartisan items on his agenda.
Nearly 100 members of Congress, as well as representatives from the energy, chemical, and manufacturing sectors, have weighed in since Bay’s departure with warnings that a non-functioning FERC poses an impediment to efforts to modernize the country’s energy infrastructure and ensure Americans have access to reliable and affordable energy.
Their concerns are well placed. As the agency tasked with regulating the natural gas industry, hydroelectric projects, electric utilities, and oil pipelines, FERC plays a major role in promoting competition and innovation. It also provides the regulatory predictability that gives investors the confidence to build the wires and pipes the country desperately needs in the face of a rapidly changing power system.
Swift action to nominate at least one candidate to FERC should be at the top of President Trump’s to-do list. A single nomination would be enough to restore a voting quorum to the commission, albeit one still dominated by Democrats Cheryl LaFleur and Colette Honorable.
But President Trump should go one better, naming all three candidates quickly to ensure the five-member commission’s traditional three-to-two ratio in favor of the party in control of the White House is in place early – and for as long – as possible.
In the meantime, FERC’s career staff are capable of handling the day-to-day business of the agency. Former commissioner Philip Moeller, now a senior advisor at the Edison Electrical Institute, estimates staff can resolve as much as 85 percent of the decisions before FERC, including environmental reviews, investigations, and orders on uncontested proceedings.
That still leaves a significant number of major orders that can’t be decided – particularly rate-of-return and enforcement cases – without a vote of the commission. A shorthanded commission also cannot issue regulations. What’s more, controversial decisions made by staff may be more vulnerable to challenges from environmental groups than would formal votes of the commission.
FERC has delegated authority to staff in the past, the difference this time is the uncertainty surrounding when the president will identify candidates and how long it could take for Senate confirmation.
Getting the commission back to a working quorum could take as little as a month – two top candidates already have their paperwork done and could be nominated by the president and considered by the Senate in relatively short order – or it could take quite a bit longer.
Former commissioner Moeller said the vetting, background check, and visits with members of the Senate during the confirmation process took roughly a year when he was named to the commission in 2006. Presumably, the new administration is in more of a hurry this time around.
Republican control of both the White House and Congress – not to mention changes made last year to the Senate rules for considering nominees – means nominees face a much easier path to confirmation. Senate Energy and Natural Resources Committee Chairman Lisa Murkowski of Alaska has vowed to move quickly once the White House identifies a candidate – or three.
The White House has plenty of qualified names to choose from. With three open seats – and a potential fourth when Honorable’s term expires in June – the president should make sure those nominated bring a variety of professional and geographic experience to the commission.
Energy is a regional issue, especially where the generation of electricity is concerned. FERC needs commissioners who understand the impact of the availability of baseload versus intermittent resources in any given region of the country has on the reliability and affordability of our national power system.
Commissioners should come from a variety of professional backgrounds, including representatives from the business sector, economists, engineers, lawyers, and congressional staff. That has been the case historically, but in recent years the vast majority of commissioners have been selected from state public utility commissions.
The president should take a broader approach and select candidates who understand the importance of ensuring the country has energy that is above all reliable and affordable. And he should do so soon.
Robert Dillon is Vice President of Communications for the American Council for Capital Formation Center for Policy Research, a former staff member of the U.S. Senate Energy and Natural Resources Committee, and former journalist covering energy policy.