Norman C. Bay just resigned as chair of the Federal Energy Regulatory Commission (FERC), leaving a mess behind him. This is the entity that controls the power to approve contested electric transmission lines, natural gas pipelines and utility plans. He resigned after President Trump promoted Cheryl A. LeFleur to chair the commission.
Now, reports the Pittsburgh Post-Gazette, FERC doesn’t have a quorum:
When Bay departs, the five-person commission, which already has two vacancies, will no longer have a quorum. No quorum means no approvals for contested issues including electric transmission lines, natural gas pipelines and utility plans. Any new member nominated by Trump must go through Senate confirmation, something that could take another four months.
For the Marcellus and Utica regions in the Northeast, this could mean serious problems. The list of approvals isn’t short, despite the “increased urgency” to get project approvals. President Trump’s promise to create jobs and “jump start infrastructure projects” seems unrealistic now that Bay’s void leaves the commission with no quorum to get business accomplished.
According to the Associated Press, at least a half dozen major pipeline projects totaling more than $10 billion wait approval while FERC works to fill the vacancy on the five-member panel. Those on the list include:
- Nexus pipeline, $2 billion, Ohio and Michigan
- PennEast pipeline, $1 billion, Pennsylvania and New Jersey
- Northern Access pipeline, $450 million, Pennsylvania and New York
The AP also noted that Senate Energy Committee Chairwoman Lisa Murkowski, as well as several energy-related trade associations, all urged President Trump to replace Bay sooner rather than later. Murkowski said she has advised the White House for months of the need to nominate a new commissioner. As FERC waits for a new commissioner, natural gas infrastructure projects in the Marcellus and Utica areas will be indefinitely delayed.
Bay’s departing words of warning
On Norman Bay’s final day in office as FERC chairman, the commission ruling on the 96-mile pipeline proposed by National Fuel in Pennsylvania and New York. In a separate statement that accompanied the ruling, Bay commented on the benefits of natural gas infrastructure, including its “significant economic, reliability, and resiliency benefits.”
Bay noted that carbon emissions from the power sector have dropped 24 percent since 2005. However, he warned about the controversies that have arisen from natural gas pipeline infrastructure. Bay says:
While FERC does not regulate the production of natural gas, methane emissions, or the use of fracking, many commenters have raised environmental concerns in our certificate proceedings. Moreover, because our certificate authority under the Natural Gas Act carries with it the ability to invoke eminent domain, property rights advocates have also objected to pipeline projects, alleging that private property is not being taken for a public use. As a result, the public interest in our work on energy projects is considerable.
Bay’s statement encourages the Commission to take into account “whether the capacity is needed to ensure deliverability to new or existing natural gas-fired generators, whether there is a significant reliability or resiliency benefit; whether the additional capacity promotes competitive markets; whether the precedent agreements are largely signed by affiliates; or whether there is any concern that anticipated markets may fail to materialize” when reviewing pipeline approvals.
Bay continues by saying the Commission must take into consideration long-term issues when examining evidence, as to avoid projects created during boom-and-bust cycles, overbuilding that may subject ratepayers to increased costs. Hey warned that the Marcellus and Utica have already seen production dips, and questions what could happen to infrastructure should gas be cheaper for customers if produced in other areas.
Production in the Marcellus and Utica led to flow reversals, with gas being transported from east to west and north to south. What happens to infrastructure developed to ship Marcellus and Utica gas west, if gas is cheaper to produce in Texas and Oklahoma? To the extent that producer-shippers are driving the development of new infrastructure, pipeline developers may now be exposed to market risk not present with shippers that are local distribution companies with a reliable rate base and predictable revenue stream.
Last, but not least significant to Bay’s statement, he addressed the manner in which the Commission conducts environmental reviews. During Bay’s term as FERC chair, regular protests against pipeline projects occurred. According to RTO Insider, at least one protest even occurred right outside Bay’s D.C. house.
FERC has always maintained that production of gas is the responsibility of the states and the Interior Department, and Bay states that the Commission “has concluded in many cases that the pipelines do not cause the production of gas.” Yet Bay appears to have changed his tune in regards to the environmental effects that could be a result of pipeline construction. He states:
I believe the Commission should analyze the environmental effects of increased regional gas production from the Marcellus and Utica…Where it is possible to do so, the Commission should also be open to analyzing the downstream impacts of the use of natural gas and to performing a life-cycle greenhouse gas emissions study, both of which DOE has conducted in issuing permits for LNG exports. This information may be of use to the Commission, the public, and industry in examining the broader issues raised in certification proceedings.”