Rep. Sean Casten on Hot FERC Summer and how to prepare the US grid for rapid decarbonization

Plus, tips on how to trick people into caring about federal energy regulation.

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As regular readers of my work are well aware, the fastest way to decarbonize the U.S. economy is through clean electrification — decarbonizing the electricity sector and shifting energy use in other sectors like transportation and buildings over to electricity.

How can the federal government help that process along? Most control over power utilities and markets lies at the state level. There’s only one federal agency with real jurisdiction over electricity: the Federal Energy Regulatory Commission, or FERC.

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FERC is not an agency people many people follow or even know about — in fact, in my household, it has become a kind of jokey shorthand for the boring stuff Dad writes about.”

But it could play a key role in implementing President Biden’s climate agenda. And it has come to a crucial crossroads.

FERC has five commissioners. Currently, three are Republicans, but one of them, Neil Chatterjee, came to the end of his term on June 30. He has agreed to stay on temporarily because Biden, somewhat inexplicably, has yet to formally nominate anyone to replace him. Until he does, and the Senate confirms, the commission will not have a Democratic majority and won’t be able to get anything big done.

That’s unfortunate, because FERC has lots of big decisions to make — about transmission, electricity rates and markets — with potentially transformative consequences. But the agency moves slowly, with rulemakings often taking months or years, and it only has three and a half more years to get everything done. Biden needs to get someone in that seat.

Enter Representative Sean Casten. The Democrat from Illinois’ 6th District, which includes wide swaths of the western suburbs of Chicago, is trying to draw attention to FERC and the importance of nominating a bold and climate-minded new commissioner. He’s leading a communications campaign called Hot FERC Summer,” a twist on Megan Thee Stallion’s Hot Girl Summer.” (Hey, nobody said getting eyes on FERC was easy.)

Casten, a member of the House Select Committee on the Climate Crisis, recently delivered a floor speech filled with Stallion-related puns of varying cheesiness, calling on Biden and Dems to nominate and approve a new commissioner quickly. He has also co-authored bills on transmission siting and ratemaking that clarify and reinforce FERC’s obligation to take climate change into account in its decisions.

I have known Casten since the 2010s, when he was the CEO of a waste heat recovery company called Recycled Energy Development. His long experience in the clean energy industry informed some sharp analysis, and he occasionally wrote guest posts for my blog at Grist, the environmental news site I worked for at the time.

As you can imagine, it was a delight to see him win a seat in Congress in 2018, bringing his deep energy expertise to a body that has often lacked it. I was excited to geek out with him about FERC and the state of congressional energy politics. Here is an excerpt from our conversation, condensed and lightly edited.

David Roberts: Whenever I tell people I’m writing about FERC, the eye glaze is almost instant. So tell us: Why should ordinary people care about FERC?

Rep. Sean Casten: The way you stop people’s eyes from glazing over with FERC is you couple your conversation with a picture of Megan Thee Stallion and some hip-hop lyrics. I’ve found that is a very effective way to keep people engaged.

Look, we have to get to zero carbon way faster than anybody is even talking about in the most ambitious world right now. And as you’ve so eloquently explained, it’s really hard to see how we do that without electrifying everything.”

Let’s talk about the transportation sector, which uses about as much primary energy as the electric sector uses today. If we were going to electrify the entire transportation sector, we would need to build about as much electricity generation as we already have, and then build a whole lot of wires to connect that new generation that’s going to be in different places — because it’s going to be where the sun and the wind and the renewable resources are, not where the coal seams are — up to loads in new places along highways and homes and apartment buildings. And that’s just for the transportation sector. 

The Department of Energy has no meaningful jurisdiction over those questions of generator siting, generator installation, generator permitting, transmission siting, the markets that regulate and give people an incentive to deploy capital. The Environmental Protection Agency doesn’t really have a lot of jurisdiction over that. The Department of Transportation doesn’t really have much jurisdiction over that. 

FERC does. And so, if we are going to do what’s necessary on climate, FERC is really the only agency that has the tools necessary to do what is environmentally necessary, even though it’s not an environmental agency. That’s why you should care.

Roberts: The big thing going on with FERC right now has to do with commissioners. What’s the state of play there?

Casten: The president has the opportunity to appoint someone. There are several names being thrown out that have been vetted. But the Biden administration has not affirmatively put one of those names forward.

That really needs to accelerate, because until they’ve got a 32 majority, they can’t initiate the hearings; until they’ve initiated the hearings, they can’t do the announcements of proposed rulemakings for public comment; until they do those, they can’t do the orders; and until they do the orders, the markets are not going to start responding to the ways that they might change these structures. We don’t have a lot of time.

I’m quite certain that if the White House wanted to, they could twist arms and put some pressure to make that process move a little faster. I’m also quite aware that they have a lot of things on their plate, and they can’t do all of them.

Roberts: Transmission used to be a rather sleepy topic that not a lot of people cared about, but all of the sudden it’s hot, it’s in the news, everybody’s talking about it.

What is wrong with transmission, and what can FERC do to fix it? I know you have a bill specifically about FERC and transmission, but I’m also interested in what FERC can do on transmission without a clarifying bill.

Casten: Let me take [those questions] in reverse order. I think there are two problems with transmission. The first is that it is really, really hard to get a transmission project permitted in a timely fashion. And that is the result of the fact that there is no controlling agency for a transmission project. If you want to build a wire to connect the wind in Iowa to the electric loads in Chicago, every time that wire crosses a town line, a county line, a state line, you’ve got a different group of people who can object — as compared to natural gas, where you can have a single controlling agency, where everybody who might object can still weigh in, but they can only weigh in to one agency, and you adjudicate these all at once. 

That has made transmission virtually impossible to site in this country, and that is why for the last 20 years, the way that we’ve built power plants — [prior to] the broad deployment of renewables — was to find where there was an existing interconnection [to the grid] and then run a gas pipe to that point to build a combined-cycle plant at that node because it was easier to permit the gas that way. 

FERC can’t really fix that; that needs to be fixed statutorily. The Biden White House and a number of us in Congress have been talking about creating a single Office of Transmission Planning that would have that authority. It’s really important because then you would give certainty to people who want to build either generation projects that need transmission or the transmission to bring it to load.

The second problem is one that I think FERC does have the authority to address: It’s the classic problem of regulatory capture. There’s a huge governance problem at all the regional independent system operators [ISOs] and regional transmission organizations [RTOs], which is that their membership is a function of their market participants. So wherever you live, think of the big utilities in your state and the big transmission companies: They’re the members of those organizations.

And those entities, more often than not, make most of their money during a few hours of the year when there’s a real congestion situation. Electric markets are actually extremely efficient most of the time, which means that it’s really hard to make a profit most of the time. And when you get congestion on nodes, that’s where the big money comes in. And so they have a very strong economic disinterest in market efficiency. 

So historically, that has made it really hard to connect transmission that would have the practical effect of taking excess generation out of one part of the grid that’s got too much load and moving it to a place that’s congested. Maine has always had way too much generation; southeast Connecticut has always been way too constrained. Why are we not getting that fixed? In the Northwest, [the Bonneville Power Administration] is dumping excess power, because they have more wind and hydro than they know what to do with, even while California is short, but you can’t get a wire that’s run down there. 

And those are solved by making sure that we bolster the interregional connections on the grid. This bill — I should give all credit to Senator [Martin] Heinrich [D-New Mexico], he’s been really leading this; I’m carrying it in the House — [would] make sure that we fix some of those interregional issues, and really direct FERC to do it, because the pressure from the RTOs and ISOs is going to be to resist that. 

I think they have that authority. I think there’s some debate over whether they have enough authority to deal with some of the cost-allocation questions. If your utility was to build a transmission wire to bring power down to Northern California, should you pay for that, or should Northern California pay for that, or how should you divide that? Those are tricky issues. So some of the cost allocation comes in, but I think FERC has the ability to do that.

But the problems derive from the governance issues: Are you willing to flex the authority you have? If not, do you need authority that you haven’t currently been provided?

Roberts: One hot topic of conversation lately is about Texas-based ERCOT: They famously have created an RTO, a regional transmission organization, that only applies to Texas, thereby escaping FERC jurisdiction, because they don’t ship power over state lines. And they are not shy about saying that’s why they did it.

But they had this cold snap; a bunch of people died and a bunch of people lost power. And now we’ve just had a study that said ERCOT could have saved about a billion dollars during that cold snap if it had just been interconnected with surrounding states.

Is there any way for the federal government to force ERCOT to interconnect? Or will Texas basically have to make that decision on its own?

Casten: When I said to one of my colleagues from the allegedly great state of Texas, who shall remain nameless, Will you be advocating to interconnect to the grid?” there was a pause, and the response was, Well, we are still Texas.”

Roberts: FERC, by statute, is supposed to ensure just and reasonable electricity rates. So these big [investor-owned utilities] have to come to FERC and justify their rates. And one of the fights going back years now is whether climate damages should be taken into consideration when considering what counts as just and reasonable rates. You have a piece of legislation that explicitly tells FERC to do that. Can FERC do a little bit of that without legislation? And what exactly does your legislation specify that it must do?

Casten: I would argue that FERC absolutely has this authority, and let’s make sure they also have an obligation to do it.

There are [several] pieces to why this bill is necessary. The bill is the Energy PRICE Act [Energy Prices Require Including Climate Externalities]. What it does is remind FERC that, first, the 1935 Federal Power Act said rates must be just and reasonable; second, in 1956, the Supreme Court ruled that [FERC’s predecessor, the Federal Power Commission] must ensure the protection of public interests; and third, in 2009, the Environmental Protection Agency endangerment finding said that rates must take into account current and future generations.

So with those three decisions in tandem, you have an affirmative obligation on FERC to set rates that take into account the costs and consequences of climate change and effectively set up markets that for all practical purposes build in a carbon price in some fashion. 

Roberts: So to summarize: It sounds like you think FERC already has much of the statutory power it needs to implement a lot of these things, and mostly it just comes down to kicking them in the butt to do it — a lot of which sounds like it could be solved with a sufficiently committed commissioner. In some sense, that might solve many of these problems — just getting three commissioners on the board who are aimed in the right direction.

Casten: Sing it from the rooftops. 

***

You can listen to the full (much longer) conversation and read the full transcript at Volts.

(Lead photo: Tom Williams/CQ-Roll Call, Inc. via Getty Images)

David Roberts is editor-at-large at Canary Media. He writes about clean energy and politics at his newsletter, Volts. Previously, he covered the same subjects at Vox and Grist.