Members Question FERC Over EPA’s Clean Power Plan

July 29, 2014

WASHINGTON, DC – The Energy and Power Subcommittee, chaired by Rep. Ed Whitfield (R-KY), today held a hearing on “FERC Perspectives: Questions Concerning EPA’s Proposed Clean Power Plan and other Grid Reliability Challenges.” All five Commissioners of the Federal Energy Regulatory Commission testified on EPA’s proposed rule limiting carbon dioxide emissions from the nation’s power plants, and how the rule would impact reliability and electricity markets.

EPA’s Clean Power Plan requires states to submit for approval state or regional energy plans to meet emissions targets. Members questioned EPA’s legal authority over state energy markets and discussed FERC’s role in the development of the proposal and the rule’s implementation.

Chairman Whitfield said, “EPA is embarking on this comprehensive effort to federalize energy planning even though the agency has absolutely no energy policy-setting authority or expertise. That is why it is important to hear from a federal body that actually does have such authority and expertise, although I might add that the top down, command-and-control efforts of EPA go far beyond even FERC’s jurisdiction.”

“FERC is the agency charged by Congress with regulating electricity in interstate commerce, which is why it is so important to gain FERC’s perspective today. Even this agency, with explicit authority over electricity matters, does not have the expansive reach envisioned by EPA’s Clean Power Plan,” added full Committee Chairman Fred Upton (R-MI).

In his testimony, Commissioner Tony Clark warned, “More than any regulation I have seen during the time that I have been involved in the energy sector, this EPA proposed rule has the potential to comprehensively reorder the jurisdictional relationship between the federal government and states as it relates to the regulation of public utilities and energy development.” During questioning, Rep. Bob Latta (R-OH) asked Commissioner Clark about how states’ ‘mother may I’ relationship with the EPA would impact flexibility and electricity rates. Watch their exchange HERE.

Commissioner Philip Moeller described some of the many implementation challenges and costs associated with EPA’s proposed new regulatory regime. In response to preliminary questions from the subcommittee, he explained, “Changing from economic dispatch to environmental dispatch is truly a fundamental change that would require a complete redesign of markets to include essentially a carbon fee on any resources that emit carbon dioxide.”

Moeller expressed particular concern over EPA’s assumptions about increased natural gas generation and use and whether there will be sufficient pipeline capacity to support this market conversion. “I’m concerned that if we move to a system where there’s a lot more gas generation and dispatch: Are we going to have the pipeline capacity? Can you finance the pipeline capacity to meet that need?” Moeller asked. “It’s a real conundrum. One that we need to take a look at more closely.” Watch Rep. Pete Olson’s (R-TX) exchange with Moeller over infrastructure concerns HERE.

Members also questioned the FERC Commissioners about their communication with EPA during the rule’s development and interagency review process. With the exception of Acting Chairman Cheryl LaFluer, the Commissioners testified that they were never consulted by EPA. Watch Rep. John Shimkus (R-IL) question the Commissioners on their coordination with EPA HERE.

Members and the Commissioners both stressed the importance of an open and transparent dialogue between FERC, EPA, the North American Electric Reliability Corporation, state regulators, and other stakeholders regarding the potential impacts of the Clean Power Plan on the nation’s electric reliability. Acting Chairman LaFluer said, “FERC can and should help the EPA understand the implications that such regulations may have on electric reliability and support utility compliance with those regulations where necessary and to the extent possible. Importantly, the Commission’s work related to EPA regulations is not limited to interactions with EPA, but also includes collaboration with states, industry, and other stakeholders.”