U.S. Energy Regulator Looks to Reassert Control Amid Criticism

(Bloomberg) -- The nation’s chief energy regulator moved to reassert control of his agenda, amid criticism that his agency is mired in political turmoil.

Kevin McIntyre, who leads the Federal Energy Regulatory Commission, said the thorny issue of grid resilience is at the top of his priorities list, along with an examination of how pipelines are approved and a look at a 40-year old law designed to promote renewable energy.

That may be easier said than done as the agency, which is split on party lines, waits for President Donald Trump to fill a newly vacant seat and as speculation builds over what role, if any, the commission may play in an administration plan to bail out money-losing coal and nuclear plants. Even the specter of partisanship could cause problems for the agency, which is tasked with approving multibillion-dollar natural gas projects and overseeing wholesale power markets.

“The appearance of politicization will yield more protests and litigation from everyone,” said Nora Mead Brownell, a former commissioner and co-founder of ESPY Energy Solutions LLC. “Once you interject politics, you interject a degree of uncertainty that will drive away capital and drive up the cost of capital.”

Usually regarded as politically independent, the agency is already under scrutiny after McIntyre’s chief of staff, Anthony Pugliese, gave an interview to right-wing news outlet Breitbart. Later, Pugliese told an industry conference the agency is helping the administration identify “critical” coal and nuclear power plants, a key step in the White House’s plan to keep those facilities online. That prompted Senator Maria Cantwell and Representative Frank Pallone to question the commission’s impartiality.

“We believe this action would violate the requirement that FERC remain a neutral and unbiased decisionmaker,” they wrote.

LNG Permits

McIntyre defended Pugliese in a letter to the lawmakers and in a podcast posted to the agency’s website Tuesday. In addition to downplaying concerns about Pugliese, McIntyre credited his chief of staff with helping to expedite reviews of liquefied natural gas permits. The commission last month announced environmental review deadlines for 12 LNG export projects, a crucial step before companies can begin construction of the multibillion-dollar terminals.

A bigger issue for McIntyre might be the approval of new gas pipelines, as the commission has been split on the extent to which climate change should be factored into their decisions. In addition, legal challenges to proposed projects have become more sophisticated and have successfully delayed pipelines.

"Assuming the commission flips back to the Democrats at some point, FERC could become an impassable roadblock for new infrastructure if the Commission applies a climate test to every project,” said Ethan Bellamy, an analyst at Robert W Baird & Co. “Therefore, industry needs to push for a full Commission as soon as possible, and drive hard to get any new interstate projects certificated before 2020.”

Regardless of the agency’s political make-up, some former commissioners insist that its protocols will ensure the agency’s future independence.

“Not only is there an open and transparent record that has to be fully available to any party, but any party can take them to court and appeal their decisions and challenge whether or not they made them based on the record,” said Jon Wellinghoff, who chaired the agency from 2009 to 2013. “There is a complete administrative and legal check to ensure that their process is open, transparent and fair.”

And the agency says it’s not unusual for commissioners to hold differences of opinion on policy matters, which only improves the decision-making process.

After a break in August, the agency is set to resume its regular monthly meetings on Sept. 20.

The administration’s renewed attempt to save unprofitable power plants from closure could be the most pressing issue facing the commission in the near term.

The expected nomination of Energy Department staffer Bernard McNamee, who was involved in the earlier ill-fated coal bailout, to fill the vacant spot on the commission could give the administration a key ally and further increase concerns the agency is becoming politicized.

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