Commissioner Cheryl A. LaFleur Statement
May 7, 2019
Remarks from Commissioner Cheryl A. LaFleur at the Energy Bar Association Annual Meeting
I was convinced by my advisors to do a personal FERC retrospective rather than another policy speech. Speaking of my advisors, almost my whole team is hereJessica Cockrell, Cat Giljohann, Andrew Holleman, Steven Wellner, and my newest advisor Anne Marie Hirschberger, who is just beginning a detail in my office.
Once I was persuaded to do a FERC retrospective, EBA seemed like the best place to do it. I have of course known about this organization for yearseven back when it was FEBAbut have especially enjoyed being a part of it during my time in DC. I have spoken at this conference several times, as well as at each of the EBA regional organizations.
I also want to say how wonderful I think it is that you honored Kevin McIntyre yesterday by naming the plenary session for him. What a fitting legacy for someone whom I understand we now call Energy Bar Dude.
What I will do this afternoon is share some personal thoughts about my time at FERCdefinitely not a summary of our orders over the past 9 years.
In September 2009, I got an unexpected cold call from the White House about a possible FERC nomination. I ended up waiting many months to find out if I would be nominated, which was good training for the future. But in the words of Lin-Manuel Miranda, I did not throw away my shot.
My 9 years at FERC then have been life-changing. I would generally divide my time in to 5 chaptersand I will try to keep my narration of each year to less than an hour, so we can be out of here by dinner
CHAPTER ONE starting July 2010
My first chapter started July 2010 when I was seated at FERC. I loved it from day onethe work, the people, the issues. I am an institutionalist by temperament, and FERC is a great institution. Of course I knew what FERC did and had read plenty of FERC orders, but I didnt really know how it functionedadvisory staffs, the programs offices, the Sunshine Act, and so forth. So I had a tremendous learning curve.
I arrived to a fully staffed commission4 colleagues I had never met or even spoken to until after I was nominated. (As I have said many times, FERC is not like Beatleswe didnt grow up making music together. We are more like the Monkeeseach chosen individually, and we have to make a band.) I went through my first confirmation process with Phil Moeller, so he became my confirmation buddy and then my real buddy for the next several years.
I arrived at FERC without any real agendacertainly not a personal or political agenda, but not even any developed policy agenda, other than a vague sense I could perhaps add value on reliability work because of my background.
My goal on day one and, really ever since, was to make the best decisions I could case by case, based on the record and the law. I certainly wouldnt say I arrived at FERC with a regulatory philosophy, but I think I developed one in my early months that I have tried to stick with for the past nine years:
- LEARN ABOUT NEW ISSUES AND NEW REGIONS. Realized how much I had to learn. Visited all the regions I could and said yes to as many meetings as I could, within the ex parte rules.
- ASK A LOT OF QUESTIONS, AND TRUST STAFF. I have had 12 advisors, all FERC career people whom I didnt know before I landed at FERC, and they have all been great. And I have strongly relied on senior staff and the teams who outline options and write orders.
- GET USED TO DEALING WITH UNCERTAINTY AND GET OVER IT. (I think I got this from a postcard Scott Hempling sent out the first Christmasat least its not a teabag.) A lot of our dockets are like spaghetti on the plate with all the twisted strands of individual parties commercial interests, and you somehow have to look at that plate of spaghetti and find the public interests. Read the memos, get all the facts you can, figure out the law, but then actually make a decision. I am impatient with people who always need one more piece of data, and I try not to be one.
- TRY TO FOLLOW THE REGULATORY HIPPOCRATIC OATH: first do no harm, or in our case, dont make things worse.
- BE WILLING TO COMPROMISE. I generally believe it is better to get things 20% my way and directly affect the outcome, than to write a dissent. (I wrote only 31 dissents in first three years, out of about 1000 orders a year.) It helps that when I read options memos from staff, I often (certainly not always) find myself driven to the centrist option from among those staff presented.
- DO KNOW WHEN TO SELECTIVELY DIG IN. When I did dissent it was about something I really cared about. My first big dissent PJM transmission cost allocation remand from the 7th circuit, in which I suggested a hybrid approach between DFAX and regional cost sharing that was later proposed and approved.
As Chairman, Jon Wellinghoff had strongly views on a select, but well known, range of issues (especially demand response and transmission competition). But even on those high-profile issues, we all worked to compromise. I was proud of negotiating a compromise on Order 745 with Marc Spitzer, the net benefits test, which was cited by the Supreme Court in upholding the rule. I also worked to negotiate compromises on Order 1000, like the recognition of state RoFRs but not federal RoFRs, which seemed like a good idea at the timebut thats another speech.
Three years went by, and as we moved into 2013 and knew that Jon Wellinghoff was leaving, there was speculation about what would happen next. There was actually an article, I think in the Hill, about the top 5 candidates to replace Jon as chairman and I wasnt even mentionedeven though I was one of two sitting Democrats! Then came the Ron Binz nomination, John Norriss public anger at being passed over, the Binz withdrawal and things seemed to get more political, or at least what passed for political at the time. Article after article said things like formerly sleepy FERC is in the political spotlight
CHAPTER TWO starting November 2013
My second chapter started 45 minutes before the November 2013 Open Meeting, when I got a call from White House making me Acting Chairman. I literally walked around to tell my fellow Commissioners I got the call, and then went downstairs to the meeting. At the end of Open Meeting, Jon Wellinghoff announced that I would be Acting Chairman. I had zero transition with Jon, who left right after the meeting, but senior staff carried me and taught me how to be chairman. I immediately declared the goal of keeping the Commissions work on track during a transition of unknown length with an unknown end.
My first open meeting as chairman was FERCs 1000th meeting, and we had a big celebration, with former Chairmen, Commissioners, and staff in attendance. It was wonderfulI was floating on air.
Unfortunately, I came down to earth fast. In January 2014, the White House nominated Norman Bay, FERC director of enforcement, to be Chairman, and a couple weeks later, they told me that I might not get re-nominated as a Commissioner when my term ended in June. A few weeks later, we were thrust into a political mess with the Wall Street Journal leak (remember the 9 substations report?) and were navigating concerns about physical security issues on the grid.
The next several months were tumultuous, to say the least.
There were some awkward momentsat the Open Meeting when I congratulated Norman on his nomination, you could hear a pin drop. Over the ensuing months there were a flurry of press articles about whether or not I was going to be re-nominated and who would be chairman. I was finally nominated in May, and Norman and I sat together at our confirmation hearing fielding awkward questions about each other. Then it got crazierwe got a call from the Hill one evening proposing a dealI would be chairman for 9 months, then Norman would take over.
Well, I took the deal, and tried to make the most of my 9 months after we were confirmed in July. I had not been allowed by OPM to make any senior staff changes during my acting chairmanship, so I immediately promoted David Morenoff to general counsel and named Kurt Longo and Jette Gebhart as co-chiefs of staff. I was also able to backfill several senior staff retirements. We started our efforts on energy price formation, the Clean Power Plan, and market changes in response to the Polar Vortex (which Tony Clark called just a patch of normal winter weather). The months raced by.
For most of this timebasically, from November 2013 through January 2015, when Colette Honorable was sworn inwe had only 4 commissioners, 2 democrats and 2 republicans, but I dont remember anyone really talking about it. In fact, our most publicized disagreement during my chairmanship was about whether to approve the results of ISO-NE capacity auction FCA 8 in September 2014. We deadlocked and the rates went into effect by operation of lawbut the deadlock was bipartisan on both sides!
In one of the other most contentious issues, we reached a bipartisan compromise to seek rehearing of the DC Circuit reversal of Order 745to seek rehearing on jurisdiction and not compensation. Speaking of Order 745, it was the only time anyone from the White House has ever called me about the work of the Commissionsome millennial called to ask whether we planned to seek rehearing of the DC Circuit decision. I actually got kind of huffy and said I had to discuss it with my colleagues.
During this whole period, the only time it felt partisan was when we were asked to weigh in on EPA issueslike the Mercury and Air Toxics rule and, later the Clean Power Plan. But, even on those issues, we were often able to find a way to pull together. For example, Colette worked hard to bring the full five-member Commission together to sign a letter to the EPA about a reliability safety valve for the Clean Power Plan.
I tried as much as possible to keep the work moving, even as my stepping down loomed. I assumedrightlythat Norman would keep moving the Commissions work forward when he took over.
CHAPTER THREE starting April 2015
My third chapter started when I stepped down as chairman in April 2015. Many people thought I would leave, but I didnt. I love being a commissioner, and I had worked hard to get renominated. It was hard at first when I stepped down, but it gradually got less awkward and then perfectly normal. For about a year and a half, in retrospect, life at FERC seemed pretty settled.
Whether I was chairman or Norman was, during the whole period of our time together, the work kept going. We focused a lot on market rules and price formation. Under Normans leadership, we started data collection initiatives, storage inquiries, and lots of tech conferences on various issues. We were also starting to spend a lot time thinking about how we did pipeline caseshow to assess need and climate issues. We starting putting more upstream and downstream information including GHGs in our orders. The Commission had a lot teed up heading into the fall.
However, and this turned out to be really important in subsequent months-- our Commissioner ranks kept dwindling. Phil Moeller left in the fall of 2015, and then Tony Clark left in the fall of 2016. The Obama White House didnt nominate any successors, so we were down to just three Democratic commissioners by the end of September 2016. That didnt seem like a big deal at the time, but obviously it was in retrospect. As we went into the election, a lot of the press talk and industry gossip was about whom Hillary Clinton would make chairman after she was elected. I was never mentioned, but I was used to that by then
CHAPTER FOUR starting November 2016
The next chapter started on Election Day 2016, which rocked our world (Of course, it rocked THE world, but this is a FERC speech.) I remember sitting at a tech conference scheduled the day after the election, tryingwith limited successto focus on some technical energy storage issue.
The next couple months were busy. Norman worked hard to move things he cared about (especially storage). We had lots of debates about MOPRs and capacity markets, including the origins of what ultimately became the May 1-2 tech conference.
After the inauguration, on Wednesday January 25, a messenger from the White House delivered a letter naming me Acting Chairman. (I really am every presidents second choice, am I right?) The following day, Norman announced that he would be leaving the Commission. We had 9 days of total mania before we lost quorum. Everyone at the Commission worked really hard and we were able to vote out more than 80 orders.
Then the weird no quorum period begana period of tremendous uncertainty throughout the building. We had no idea when nominations would come, who they would be, or when they would get confirmed. My communications and policy advisor, Andrew Holleman, made the ill-fated decision to not shave until quorum was restoredbut the no quorum period lasted a lot longer than the Stanley Cup playoffs!
We focused as much as possible on keeping the agencys work moving forward, which meant staff issuing delegated orders where they could and sending things to judges for hearings. On other matters, we prepared draft orders, policy memo after policy memo, and presentations for new commissioners when they came. We held tech conferences to build records, including on state policies and market rules.
We started receiving a lot of executive orders from the White House, but there was no direct Administration involvement in the agency of which I was aware. Over at the DoE, Alison Silverstein and Travis Fisher were working on the so-called 60 day grid study; they engaged with us but were very respectful of our independence.
At the end of June, Colette left and we were down to one Commissioner. Thank heaven for FERC staff.
Nominations periodically rolled inNeil Chatterjee and Rob Powelson in May 2017, and then Kevin McIntyre and Rich Glick in July 2017. I waited anxiously before every Congressional recess, wondering if this would finally be the time I got some new colleagues.
In early August 2017, I gave up and finally took a vacation, and of course, the first two new Commissioners were confirmedNeil and Rob! Andrew finally got to shave after more than 6 months. I was obsessing about whether I should come back from vacation, but 45 minutes after Neil was sworn in I got a call from the White House that I was being replaced as Acting Chairman. I stayed on vacation, then came back to a different Commission and my fifth and final chapter.
CHAPTER FIVE starting August 2017
Neil picked up the reins immediately and started mowing through the backlog of drafted orders, trying to get the agency back to normal. Unlike my transition with Jon in 2013, there was solid coordination, with my former Chief of Staff Steven Wellner helping with the transition.
Neil and Rob got staffed up, through a combination of external and internal hires. There was one unusual changemore administration involvement in selecting senior staffbut we were excited to be able to get back to work, so we just rolled with it.
The following month, in September 2017, the DoE Notice of Proposed Rulemaking on coal and nuclear subsidies hit 888 First Street like a thunderclap and signaled much more Administration involvement in FERC policy than in the past. While we were already working to catch up, and we spent much of the fall grappling with the NOPRit was really divisive, and soaked up so much time and energy that could have been directed at the backlog of pending policy dockets.
Right before the original deadline for FERC action, we got two new colleagues, including our new Chairman, Kevin McIntyre. The agency reset again, with new commissioners, new advisors, and new views to incorporate.
Kevins first big order of business was the DoE NOPR. I was very pleased when FERC unanimously rejected the NoPR in January 2018. That was what the record required, but it also protected FERC independence. I give Rob a lot of credit for holding his ground on his pro-market views and Kevin for bringing us together at the end.
Under Kevins leadership, we quickly launched several new initiatives reviews of our certificate policy statement, resilience, PURPA, and others. We also voted out the storage final rule, which Neil had identified as a priority.
However, rifts started to appear last spring, and I fully acknowledge I was part of them. In part, I think the polarization of Washington DC and societal rifts on big issuesespecially climate changehave affected 888 First Street. Certainly, issues that have clear climate implications have been among the hardest to agree on.
Those disagreements came to a head in the New Market rehearing order issued last May, in which the Commission indicated that it would no longer disclose GHGs in orders, as had been done for the previous two years. Both Rich Glick and I strongly opposed this policy change. The faults deepened over the Commissions handling of the Sabal Trail remand, concerning the consideration of indirect GHGs emissions.
Throughout this period, and acknowledging my separate statements, I have tried to keep to my same regulatory philosophy. I am still trying to decide case by case, still trying to get things partly my way, and still trying to find the middle where I canif a middle exists. That has meant trying to find a way to vote out orders for infrastructure I think is needed even if I have to supplement the climate analysis myself. Rich and I have taken different paths on some climate issues, but I very much respect his viewsand expect that the courts will ultimately require the Commission to do more climate analysis.
Another contentious issue has been how the wholesale markets adapt to state policy initiatives, many of them climate-driven. During 2018 we voted out major cases in ISO-NE (CASPR) and PJM, each voted 3-2 with multiple separate statements. These cases implicate views of markets, state/federal authority, and resource choices, which would be hard enough to deal with under the best of circumstances. Unfortunately, these cases compounded the tensions on the floor.
By far the most consequential event of 2018, though, was the illness and eventual passing earlier this year of Kevin McIntyre. The loss of Kevin was a major blow to the agency on both a personal and professional level. Coupled with Rob Powelsons departure last summer, the reconstituted FERC of December 2017 never had a full chance to get its bearings and tackle the Commissions work.
As you all know, last fall Neil resumed his role as Chairman after Kevin stepped down, and then in December, Bernie McNamee was confirmed for the remainder of Robs term. For the last few months, weve all been trying to find our rhythm, but of course more changes are in store this year.
FERC Going Forward
In retrospect, it is hard to deny that the collective impact of all of these eventsparticularly the continued changes in Commission membership and leadership, and the underlying policy disagreements--has been significant. While most of our orders are still unanimous, weve seen more dissents and separate statements, and more partisan splits. I myself have written separately 36 times in 2018 and 10 times in 2019 (assuming eLibrary is correct), though many of them have been concurrences (or sometimes discurrences, as we call them in the office).
During this period of increased split decisions, even some less prominent orders without obvious climate aspects have been stalled at times because individual commissioners are too dug in on an issue to agree on language. This has happened far more frequently than in the past. I think disagreements on big things, and the general lack of continuity, have made it harder to meet in the middle.
I believe the pattern of vote splits along partisan lines is unfortunate for several reasons:
- First, to use an adage that I think Joe Kelliher coined, the Commission speaks loudest when speaks with one voice.
- Repeated partisan splits give the appearance that people are voting by party philosophy not individual views.
- Bipartisan voting promotes policy throughput and continuity, which in turn promotes regulatory certainty. I think it would be unfortunate if major policy changes were made on a split party line vote.
Going forward, there are a few things that I remain very hopeful about.
- First, I am optimistic that the core of FERCincluding our wonderful staffremains strong and independent.
- Second, I hope that my current colleagues and future commissioners will keep working to compromise, because that makes the Commission most effective and its policies most enduring.
- Finally, I hope you, the FERC bar, will keep working where you can to find compromise proposals and solutions in your dockets and your stakeholder processes and bring them to us.
I very much wanted to stay on the Commission and keep working on all these issues. But fortunately for the length of this speech there are no more chapters. My time at FERC will come to an end sometime later this year. I expect to stay active in energy, probably in a portfolio of engagements. I want to use my experience to help in some way the continued transition to the grid of the future.
One of the best parts of the past decade is all the wonderful people I have gotten to know both around the country and in DC. An awful lot of them are here in this room. Thank you for welcoming me to DC and for all the support and friendship you have shown me. Wherever my future leads, I hope that our friendship and working relationships continue.
|View Printable PDF Version|