Strategically, the year 2021 was when the federal regulator of America’s wholesale electricity markets started redrawing its own map, and the man holding the pen was FERC Chairman Richard Glick. The landscape he inherited: seven regional transmission organizations covering 60% of the U.S. population, with the West and the Southeast as the two great holdouts, and a Department of Energy-backed market study already pricing a western RTO at “annual benefits of up to $2 billion” in 2030. Speaking on Oct. 20 to the Western Interstate Energy Board and to its Committee on Regional Electric Power Cooperation, Glick laid out a doctrine of parity: the rules that bind organized markets should bind everyone. “The policy initiatives we’re aiming to achieve should be addressed both in terms of RTO and non-RTO markets,” he said.
The calculus he exposed was regulatory arbitrage. “In some cases, I think we give utilities an excuse not to join RTOs if they can say, ‘Well, if I join an RTO, I have to be subject to Order 2222 and 841 and all the other orders they have.” he said, according to an EnergyWire report, citing the commission’s orders on distributed energy resources and energy storage. Harvard’s Ari Peskoe, who directs the Electricity Law Initiative at the environment and energy law program there, agreed in blunt terms: “FERC has to move actively to regulate the utilities that are not in RTOs, in part to ensure that utilities not in RTOs will not stay out to avoid FERC rules and those already in RTOs won’t leave in order to avoid FERC rules.” Nine former FERC commissioners, including four past chairs, had written on June 2 asking the agency to simply require utilities to join RTOs; Glick questioned whether the independent agency held that authority. His own preference was no secret. “I believe there needs to be an RTO in the West. I think the time has come for it.” And the posture he promised the region was patience with a deadline: “This commission has been very deferential and will continue to be deferential to the region.”
The broader stakes ran through climate policy. The Federal Power Act makes FERC a resource-neutral referee of wholesale markets, but as a National Hydropower Association analysis noted in February 2021, every chair arrives with a hobbyhorse: Jon Wellinghoff pushed demand response, Cheryl LaFleur and Norman Bay wrestled state policies against capacity markets, Neil Chatterjee sped liquefied natural gas approvals. Glick’s file was thicker than most. In 2019, while a commissioner, he and legal advisor Matt Christiansen had co-written a 46-page Energy Bar Association article, a playbook for steering the commission at climate change while conceding FERC “is not a climate regulator” and leaning instead on the public interest determination that runs through wholesale rates, transmission development and infrastructure approvals.
For hydropower, the playbook read like an invitation. “Hydroelectric facilities can play a potentially significant role in addressing climate change.” the article argued, noting hydro’s zero-emissions output and its dispatchable character, with pumped storage able to drink up electricity at peak production and hand it back when output falls, and urging that this integration value bear on licensing decisions. The article also warned that the clean energy transition “will affect how ancillary services are defined, offered, and procured” a shift that would reward the flexibility hydro already sells.
What this signals is markets as climate instrument, and 2021 tested the coalition behind it. The infrastructure bill passed by the House on Nov. 5 carried $65 billion for the grid, with the Department of Energy citing power outages that cost the U.S. economy up to $70 billion annually, plus $7.5 billion for vehicle charging. Willie Phillips, a Democrat who chaired Washington D.C.’s Public Service Commission, advanced unanimously from the Senate committee on Nov. 2 toward the fifth FERC seat and a 3-2 Democratic majority; Republican John Barrasso blessed him: “I believe Mr. Phillips will bring a wealth of expertise in safeguarding energy reliability and affordability to the Federal Energy Regulatory Commission.” The counterweight came from the American Enterprise Institute’s Benjamin Zycher, who read FERC’s mandate as “reliability and efficiency” and urged the commission to focus on “facilitating this competitive evolution.” The board was set, the pieces were moving, and the chairman had told everyone which endgame he was playing toward.
Sources
- Issue No. 6 – The Energy Reality Report
- How Hydropower Could Fit into New FERC Chairman Rich Glick’s Climate Focus – National Hydropower Association
