A Climate Back Door to Watch: Biden wants to federalize (control) the electricity grid

Encouraging the development of “distributed energy resources,” to use the lingo, “is a good thing,” wrote Commissioner Mark Christie, who was confirmed in November. What’s not good, he said, is “eviscerating the states’ historic authority.” Mr. Christie argued that FERC was “siding with commercial interests” and against “the states and other authorities whose job is to defend the public, not private, interest.”

To accommodate this distributed power, the grid “will inevitably require costly upgrades,” Mr. Christie said. “We all know these costs will ultimately be imposed on retail consumers,” including those who can’t afford a Tesla. Also dissenting was Commissioner James Danly. “This order unnecessarily invades an area best left to the states,” he wrote, “burdening them with another of our Good Ideas, the details of which we leave them to figure out, and the burdens of which we leave to them to bear.”

FERC’s authority in this matter flows through its regulation of Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs), which facilitate electricity markets. The PJM Interconnection touches 13 states, from New Jersey to Illinois. The Southwest Power Pool stretches from the Texas Panhandle to Montana.

Both of those RTOs asked to delay their compliance deadline to 2022, and FERC granted the requests last week. The filing from the Southwest Power Pool suggested the original deadline this summer was too tight, given that “these changes could have significant impacts on the safety and reliability of the distribution system and may require a distribution management system to be implemented.”

FERC’s reach isn’t all-encompassing because many Southeastern and Western states have no RTO or ISO. But that could change: A climate bill introduced last month by House Democrats includes a provision saying that, within two years, “each public utility” must “place its transmission facilities under the control of an ISO or an RTO.” Which raises a question: If Democrats are so eager to extend FERC’s grasp, what might it do next, especially once President Biden names another commissioner?

Hitting Mr. Biden’s climate targets will “require major revisions to FERC’s rules for interregional transmission planning and its financial incentives for new power lines and other grid-enhancing technologies,” S&P Global Market Intelligence wrote this week. Last year FERC signaled a willingness to hear proposals from RTOs on “carbon pricing” in electricity. At a FERC conference in September, as one trade publication wrote, “consensus was less clear on whether the commission had the authority to pursue a carbon price unilaterally.”

Experts said it might be “a stretch of authority,” but what else is new in Washington?