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FERC’s Unwise Regulatory Power Play
The news is full of stories that the next summer heat wave is expected to cause brownouts and blackouts throughout the nation. Running a grid is complex business, for the relevant regulators must safely balance the distribution of power across the nation to meet rapid shifts in demand over different locations and times. The first line of attack for the energy crisis is increasing the capacity of the grid, which requires pumping more energy into the system, chiefly from fossil fuels. On energy production, a waffly Biden administration resorts to a combination of explicit bans and de facto slowdowns. The president’s many decisions to either shut down or slow down the construction of new pipelines intensify shortages, which compounds the overall danger. At the same time, the decline in Russian natural gas supplies puts increased pressure on world energy supplies, which has boosted oil prices to well over $100 per barrel.
Equally important, actions that take place inside the electrical grid must also be prudently carried out. Much of the government’s power over the grid is vested in FERC, the Federal Energy Regulatory Commission, which has taken over many of the functions of the older Federal Power Commission, including its traditional ratemaking functions for public utilities. Right now, FERC has, by a notice of proposed rulemaking (NOPR), put up for public comment an exceptionally complicated proposal from early May 2022 that travels under the impressive title “Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection,” which stresses how activities that take place within one portion of the grid necessarily impact activities elsewhere on the grid. This NOPR proposes a novel way to achieve that end.
Thus paragraph 3 imposes “long-term regional transmission planning” needed to allow FERC to decide whether the proposed course of action by any regulated party can “meet transmission needs driven by changes in the resource mix and demand.” As part of that requirement, the commands in paragraph 4 “require that public utility transmission providers in each transmission planning region seek the agreement of relevant state entities” on all the relevant cost allocation programs that are involved.