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LaFleur notes FERC role in EPA Clean Power Plan

Rockville, MD (February 2, 2015) -- FERC Chairman Cheryl LaFleur believes the commission has had ample input into the EPA's Clean Power Plan (CPP) and it still has a chance to get its two cents in, she said in speech at a National Press Club luncheon last week in Washington, DC. LaFleur spent much of her remarks on the CPP proposed rule, which is coming to the top of FERC's agenda with a series of four technical conferences starting in February.

"I am honored to lead an agency that is bipartisan and independent by design and that's built up credibility due to all the people that came before us over decades," LaFleur said. "Because of that independence and credibility, people both for and against the Clean Power Plan are looking to us to publicly validate their views.

"I've taken a pretty firm line that I don't think that's FERC's role."

FERC is not an environmental regulator. EPA is and it is reviewing millions of comments and will come out with a final rule this summer.

The economic regulatory commission has a major role to play as the CPP is implemented, she added.

The country can make major progress in addressing climate change but it can only do that if it has the needed infrastructure and energy markets in place, LaFleur said. The proposed rule will require new natural gas pipelines, electric transmission, power plants and the infrastructure needed to get efficiency and demand-side management programs in place, she added.

Demand for natural gas in the power industry will rise with the CPP as one of its "building blocks" calls for the country to use its existing plants to be run more often, LaFleur said. But the EPA did not require compliance methods and new natural gas plants might be cheaper in some regions than any of its building blocks, she added.

Using more gas means the country will need more pipelines and compressor stations to market it and that is under FERC's bailiwick. That aspect of FERC's regulations have seen more attention from climate change activists who appear at its meetings, in protests in front of its headquarters, in the commission's dockets and regularly reach out to LaFleur through email and Twitter, she noted.

FERC takes all parties' views seriously, but it is a creature of statute and the Natural Gas Act does not give it the authority to regulate drilling. It approves pipelines when they have a demonstrated market need – meaning contracts with customers – and as long they can be built safely and with limited environmental impact, LaFleur said.

Reviews are project specific and limited to the facts in that docket. FERC cannot consider "unquantifiable impacts" of projects.

QUOTABLE: I think that our nation is going to have to grapple with our acceptance of gas generation and gas pipelines if we expect to achieve our climate and environmental goals. As far as FERC, I think our work on permitting gas infrastructure is going to be essential to the successful implementation of the Clean Power Plan. – FERC Chairman Cheryl LaFleur

The CPP will also mean new infrastructure on the power side, with transmission lines needed to deal with retiring generators and to connect any new central-station renewables that get built to meet state plans, LaFleur said. Landowners who do not want lines in their backyard often oppose new transmission but sometimes ratepayers are against them as well, she added.

FERC has more work than ensuring energy has enough pathways to reach its demand. The commission will have to make sure market rules and state implementation plans for the CPP do not clash.

Those plans will have states explaining what resources they want to use and that will mean ISO/RTOs will have to change how they have always dispatched plants using the least cost first.

QUOTABLE: If the markets are to survive [implementation of state CPP compliance plans], and [the markets have] done a good job for customers, we'll have to change the way they work to support the state plans to reconcile these two objectives. I think it's going to be a lot more than tinkering around the edges.– LaFleur

Some RTOs are largely or entirely in one state, or at least have similarly situated states, but that is not always the case, she added. PJM has 13 states with a great diversity in fuel mix, politics and energy regulation, so getting all of them to agree on one system would be a hard road.

The Regional Greenhouse Gas Initiative is an example of one of those plans working, but it was done voluntarily and includes downwind states. Repeating that success in other regions with a federal deadline overhead might be even harder, she added.

This story was originally published in Utility Markets Today (http://ow.ly/Inxmt) on January 28, 2015 and has been slightly edited for this format. To read more articles like this one, sign up for a Free Trial to Utility Markets Today.

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