FERC Eyes Restoration of Quorum, Resumption of Rulings

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--A quorum-less Federal Energy Regulatory Commission (FERC) (Washington, D.C.) may soon be a thing of the past. The federal agency, which regulates energy in interstate commerce, has been unable to issue rulings on proposed interstate natural gas pipelines, liquefied natural gas (LNG) export terminals, hydroelectric licenses and interstate electric transmission projects since early February because three of its five seats are vacant. Without a quorum of three commissioners, the agency cannot vote on proposed interstate energy projects. For more on FERC's lack of a quorum, see March 6, 2017, article - New Hurdle for Interstate Energy Projects: A Quorum-less FERC.

Last week, the Senate Energy and Natural Resources Committee approved President Donald Trump's nominees to fill two vacant seats on the commission. The Senate committee voted 20-3 in favor of Neil Chatterjee, an energy adviser to Senate majority leader Mitch McConnell (R-Kentucky), and Robert Powelson, a member of the Pennsylvania Public Utility Commission, to fill vacant commissioner seats at FERC.

Those nominees must be voted on by the full Senate. A vote has been placed on the Senate calendar, meaning a vote could occur whenever the Senate Majority Leader decides, a source told Industrial Info. The hot rumor in an already overheated Washington, D.C., is that a vote could be taken by the July 4 recess, the source added. But the impending departure of one of FERC's two remaining commissioners, competing Capitol Hill legislative priorities like health care and tax reform, plus the multiple investigations into Russian interference in the 2016 elections, could delay a Senate vote. It took the Senate six months to vote on the nomination of Norman Bay to be a FERC commissioner.

FERC was unable to provide an exact list of votes that have not been taken since it lost a quorum in February. But a Bloomberg news article fixed that value of projects left in limbo at more than $50 billion. In a story last month, Bloomberg said: "At least a half-dozen pipelines valued at $12 billion face imminent delays, while projects valued at $38 billion are slogging through an approval process that's slow in the best of times. An additional $25 billion of proposed developments just beginning the application process also could be slowed if the situation persists late into the year."

FERC's acting chair, Cheryl LaFleur, told Bloomberg the agency has delegated authority to senior staff to take action on lower-level issues, such as clearing pipeline tariff rates. The commission normally makes about 100 decisions at each monthly meeting, but she said FERC is issuing 85% fewer orders than that now. "We're building up quite a backlog," LaFleur told Bloomberg. "Infrastructure cases are pending, merger cases are pending, and a number of rule-makings and inquiries that were started we can't bring to completion."

According to a report on RTO Insider, LaFleur recently told a conference of New England utility regulators, "We do have several dozen open rulemakings or generic dockets ... multiple rulemakings on price formation in the electric markets, interconnection rules, [the Public Utility Regulatory Policies Act], hydro licensing terms, taxation [and] master limited partnerships in the pipeline area are some of the big ones that come to mind. So we are piling up quite a few cases for potential voting when [new] folks come in," LaFleur said.

"When the commission doesn't have a quorum for nearly half a year, things tend to pile up," an industry source told Industrial Info. "There's only so many things staff can do."

At least $14 billion of interstate natural gas pipeline projects have been stuck in regulatory limbo since the commission lost its quorum in February, according to Interstate Natural Gas Association of America (INGAA) (Washington, D.C.), a gas pipeline group.

INGAA's president and chief executive, Don Santa, himself a former FERC commissioner, applauded the June 6 Senate panel's vote on Chatterjee and Powelson. "We urge the full Senate to act expeditiously on these nominations to restore FERC's quorum, lacking since early February. We estimate that about $14 billion in private capital--ready to be deployed on energy infrastructure projects--is being held on the sidelines while FERC lacks a quorum and cannot act on major projects."

News reports have said major gas pipeline projects awaiting FERC approval include the Nexus, Mountain Valley, Atlantic Coast, PennEast, WB Express and Eastern Shore pipeline projects, among others.

The proposed Atlantic Coast pipeline, valued at about $5 billion, is expected to transport up to about 1.5 billion cubic feet per day (Bcf/d) of gas from the Marcellus and Utica shale formations to North Carolina and Virginia. That project is expected to be operating by 2019. For more on that project, see January 9, 2017, article - Atlantic Coast Pipeline Gets Boost from FERC, County Supervisors.

The proposed Mountain Valley pipeline expects to transport up to 2 Bcf/d from West Virginia to Pennsylvania when it starts operating, which its developer expects will be 2018. For more on this project, see February 3, 2017, article - EQT Continues Permitting Process for Mountain Valley Natural Gas Pipeline.

The planned Nexus pipeline, valued at $590 million, is scheduled to transport up to 1.5 Bcf/d from Appalachia to the Midwest. It is scheduled to be operating by the end of 2017. For more on the NEXUS pipeline project, see February 7, 2017, article - Natural Gas Pipeline Projects Gain Last-Minute Approvals by FERC.

The Energy and Natural Resources' committee vote on Chatterjee and Powelson, which took place during a week the Trump administration planned to make a number of announcements on plans to rebuild the nation's infrastructure, also was praised by the American Coalition for Clean Coal Electricity (ACEEE), a coal trade group. "We commend the Trump Administration for taking a critical step to fill two vacancies at FERC, and we look forward to their timely confirmation," ACEEE President and Chief Executive Paul Bailey said last week in a statement. "Chatterjee and Powelson are well-qualified nominees. FERC desperately needs a quorum so it can tackle a number of significant problems in the electricity markets."

The Senate panel's actions on Chatterjee and Powelson came a few weeks after one of FERC's two remaining commissioners, Colette Honorable, decided not to pursue another term at the commission when her term ends this month. "After much prayer and consideration I've decided not to pursue another term at the Federal Energy Regulatory Commission," she said in an April 28 statement. Her departure would leave Acting Chair Cheryl LaFleur as the only FERC commissioner, pending the Senate's vote on Chatterjee and Powelson.

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