Where’s the Draft?

It has been a year since FERC withdrew and renamed as draft its revised certificate policy statement and greenhouse gas policy it issued in February 2022. At last week’s open meeting, Commissioner Clements issued a concurrence in the rehearing order for the Regional Energy Access project because she found two aspects of that order “deeply troubling.” In her view, both issues would be properly addressed under the draft statements, and she renewed her call to finalize the draft statements.

Given the current makeup of the Commission and even following the naming of a replacement for the departed Chairman Glick, we do not see the current Commission issuing revised drafts of either policy, so Commissioner Clements may continue to be deeply troubled for the rest of her term.

FERC’s Draft Policies Were Untethered From Reality

Just one month before FERC issued the revised Certificate Policy Statement and Interim Greenhouse Gas Policy, we wrote in NERC Speaks to Future of Natural Gas - Will FERC Certificate and GHG Policies Reflect It? that the North American Electric Reliability Corporation (NERC) noted in its 2021 long-term reliability assessment that “Natural gas is the reliability ‘fuel that keeps the lights on,’ and natural gas policy must reflect this reality.” Yet, just one month later FERC issued the policies that essentially were untethered from this reality, which we summarized in FERC Majority Blocks the Path Forward for Pipeline Projects.

NERC’s most recent long-term reliability assessment, issued in December 2022, essentially repeats the warning from 2021. It provides that “[n]atural gas is an essential fuel for electricity generation that bridges the reliability needs of the [bulk power system] during this period of energy transition.”

As seen above, the amount of natural gas used for peak power hardly changes over the next decade and, as NERC reports, “the on-peak capacity contribution of solar and wind will grow modestly from the current 7% to 12%.”

Commissioner Clements Wants the Still Draft Statements Finalized

Despite the continuing need for natural gas to facilitate the energy transition, Commissioner Clements continues to call for the draft statements to be finalized and issued. In her concurrence, and, interestingly, not a dissent, in the Regional Energy Access (REA) rehearing order, she highlighted two aspects of the order that were “deeply troubling” to her. First, to determine the need for the project FERC continued to rely on the unaffiliated precedent agreements for 82% of the new capacity, rather than holding a hearing to resolve key facts underpinning the competing market studies filed in the docket. Second, FERC refused to consider the upstream greenhouse gas impacts of the project when it conducted its assessment of the public convenience and necessity under the Natural Gas Act.

The Still Draft Statements Would Have Addressed Both Concerns

FERC’s still draft statements would have addressed both of Commissioner Clements’s concerns and probably in ways that would have led to REA’s certificate being denied. This is precisely why Commissioner Clements wants the policies issued and precisely why we don’t believe that they ever will be as long as Commissioner Phillips and two Republicans remain on the Commission. When the policies were issued, both Commissioners Christie and Danly vehemently dissented. In FERC Majority Blocks the Path Forward for Pipeline Projects, we highlighted Commissioner Christie’s dissent where he called the argument for the policies “Orwellian.” In particular, the majority claimed its intent was to provide legal durability to FERC’s certificate orders, but according to Commissioner Christie, the policies would instead provide environmental groups with a “broad array of new avenues to attack every certificate this Commission approves.”

Acting Chairman Phillips Remains the Key

Commissioner Clements can continue to lament the lack of revised policies that would allow her to reject every pipeline project. However, as long as FERC is split 2-2 there is no chance for any policies that contain provisions that would require the analyses like those called for in her concurrence. Following the appointment of a replacement for former Chairman Glick, it becomes at least a possibility that there will be three Democratic votes available to support issuance of policies that address the same topics as those in the still draft policy statements. However, for now, we simply do not see Acting Chairman Phillips supporting any policies that contain the most troubling aspects of the still draft statements. While he could probably be convinced to adopt tweaks to the existing policy statement, we simply do not see him swinging back to the left and supporting the policies that he initially voted to approve in February 2022.

So for now, we think that Commissioner Clements will continue to be deeply troubled as her fellow FERC commissioners appear to be satisfied with applying the 1999 Certificate Policy Statement for the foreseeable future.