President Donald Trump replaced Neil Chatterjee, the Republican chairman of the Federal Energy Regulatory Commission (FERC), with James Danly, another Republican commissioner.
Chatterjee was appointed as FERC commissioner in 2017 after serving as a senior aide to Senate Majority Leader Mitch McConnell. He was named chairman of the FERC in 2018. He will remain on the commission through 2021.
“It’s been the honor of a lifetime to serve as the Chairman of FERC alongside my colleagues and staff, who represent some of the most talented and hardworking professionals in the U.S. government,” Chatterjee said statement.
Preventing Energy Price Distortions
Until recently, during Chatterjee’s tenure on the commission, FERC’s efforts focused on ensuring state support for renewable energy sources did not distort market prices in regional energy markets or force residents in states without renewable energy mandates to pay the cost for such mandates in other states.
In 2019, FERC issued a minimum offer price rule order requiring the mid-Atlantic grid operator PJM to require state-subsidized clean resources to use administratively set minimum prices when bidding into its roughly $10-billion-per-year capacity market.
States in the Northeastern Regional Greenhouse Gas initiative objected that FERC’s pricing rule would undermine their efforts to reduce greenhouse gas emissions through the use of offshore wind, which would be too expensive to bid into the wholesale market under FERC’s rule.
In addition, in September 2020, FERC’s Republican majority issued ruling blocking New York’s grid operator NYISO’s plans to modify its capacity market to give preference to electricity from generating sources that emit no carbon dioxide during power generation, a plan the state says is vital to meet its strict greenhouse gas emission reduction goals.
Chatterjee and Danly said these decisions were necessary to prevent market pricing distortions and to “level the playing field” for electric power sources lacking state subsidies, such as natural-gas fueled power plants.
Shift in Favor of Renewables
More recently, however, Chatterjee joined with Democratic Commissioner Richard Glick to issue rules favoring renewable energy resources despite their potential to distort and increase electric power prices.
For example, on October 13, in a two to one bipartisan majority decision, FERC proposed allowing regional transmission organizations, independent system operators, and state public utility commissions to set a price on carbon dioxide emissions as a way to accelerate the development electric power sources that produce no carbon dioxide emissions.
On top of various federal and state subsidies and mandates supporting various forms of renewable energy, FERC’s proposal, if finalized, would provide an additional advantage to solar and wind power generating sources by allowing them to compete more effectively in wholesale electric markets, where lower cost sources of electricity, usually generated by coal, hydroelectric, natural gas or nuclear, has dominated. Power generators must bid-in power at a set price for delivering specific amounts of electricity for use within wholesale interstate markets.
Danly objected to the rule saying it was “unwise and unnecessary.”
“Generally speaking, it’s preferable to wait to be in receipt of tariff filings, especially when you’re forging new programs like this,” Danly said at the hearing during which the FERC’s proposal was adopted. “It’s certainly premature to opine on jurisdictional questions when we are denied the benefit of actually seeing details of what might be proposed.”
Numerous media outlets suggested Chatterjee’s recent decisions in support of states’ efforts to force green energy onto regional wholesale markets were responsible for Trump’s decision to replace him with Danly, who opposed such efforts, as FERC chairman.
A statement from Chatterjee concerning his demotion seemed to give credence to such speculation.
“I have obviously been out there promoting a conservative, market-based approach to carbon mitigation and sending signals the commission is open to considering a carbon price, and perhaps that led to this,” Chatterjee said, according to the Washington Examiner.
Praise for Chatterjee’s Tenure
In a statement, Danly said he learned a great deal from Chatterjee as he guided FERC through difficult decisions.
“It has been my utmost pleasure to have served under Neil Chatterjee, both as General Counsel and alongside him as Commissioner,” Danly’s statement said. “I have learned a tremendous amount from his expertise and insight, and I am proud of the work we’ve been able to accomplish under his thoughtful watch.”
H. Sterling Burnett, Ph.D.(hsburnett@heartland.org)is the managing editor of Environment & Climate News.