• 3 minutes Nucelar Deal Is Dead? Iran Distances Itself Further From ND, Alarming Russia And France
  • 5 minutes Don Jr. Tweets name Ukraine Whistleblower, Eric Ciaramella. Worked for CIA during Obama Administration, Hold over to Trump National Security Counsel under Gen McCallister, more . . . .
  • 9 minutes Shale pioneer Chesepeak will file bankruptcy soon. FINALLY ! The consolidation begins
  • 12 minutes China's Blueprint For Global Power
  • 2 hours Who writes this stuff? "Crude Prices Swing Between Gains, Losses"
  • 2 hours Pioneer's Sheffield in Doghouse. Oil upset his bragging about Shale hurt prices. Now on campaign to lower expectations, prop up price.
  • 10 hours Climate Change Consensus Shifts in Wind, But Gas Is Still the Right Move
  • 12 hours World oil demand will keep growing until 2030, climate-damaging emissions longer, says IEA
  • 12 mins EU has already lost the Trump vs. EU Trade War
  • 5 hours Iran Finds New Oil Field With Over 50 Billion Barrels: Rouhani
  • 3 hours Atty General Barr likely subpeona so called whistleblower and "leaker" Eric Ciaramella
  • 2 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
  • 2 hours Trump On Farage's Radio Show ...
  • 1 hour Does .001 of Atmosphere Control Earth's Climate?!
  • 7 hours Iran's Master Plan?
  • 13 mins China's Renewables Boom Hits the Wall
  • 5 hours Saudi Aramco IPO Will Not Save Kingdom

Breaking News:

Oil Rebounds On Surprise Crude Draw

Alt Text

A Bull’s Guide To Oil Markets

While bearish sentiment appears to…

Alt Text

Four Ways Oil Has Made Our Lives Better

Fossil fuels are being scrutinized…

Alt Text

Oil Giant Stoically Refuses To Pay Ransom

Mexico’s Energy Minister Rocio Nahle…

Gary Hunt

Gary Hunt

Gary Hunt is President, Scalable Growth Strategy Advisors, an independent energy technology and information services adviser and a partner in Tech & Creative Labs, a…

More Info

Premium Content

FERC: Washington's Reluctant Hero

The Federal Energy Regulatory Commission is trying to avoid being drawn into the political battle over the regulatory agenda being pursued by the US EPA against fossil fuel emissions in the wave of new environmental regulations being issued by the agency.   US EPA knows it is only a few votes away from being overturned in the US Senate where even Democrats running for re-election want desperately to avoid having to take a stand on this issue.

US Energy Related CO2 Emissions Growth

Industry trade groups, state regulators and industry leaders that see the EPA regulatory push as a full frontal assault on fossil fuels in pursuit of an obvious political agenda are doing everything they can to stop the regulations from going into effect or to make sure they are a 2012 election year issues that forces all politicians to take sides.  The environmental advocates for greenhouse gas emissions reduction and using less fossil fuel are pushing back and trying to push the agenda forward before it is too late.

On top of that rising gasoline prices have drawn national attention and threaten to hurt the President’s re-election chances each time a voter fills up his or her gas tank.

What does this have to do with FERC?

Some Congressional genius in our political past, decided to fragment the responsibility for energy policy and regulation across a wide range of Federal agencies.  In its wisdom Congress designated:

US EPA with responsibility for enforcing clean air and clean water policies but left it to the agency to define the details of regulations to do so.

Department of the Interior took on the responsibility for managing the energy production on Federal lands and thus controls a gigantic portion of the best available real estate for wind, solar, oil and gas and hydropower production in the US.

Department of Energy inherited the nuclear facilities and fuels, the national laboratories and, of late, the industrial policy and investment strategies for emerging technologies that are giving it Solyndra headaches.

Department of Defense is all hot and bothered over energy security so it has gone on a mission to create microgrids and renewable energy resources at military bases and to use its substantial influence to develop mobile energy potential, energy storage capabilities and other technologies it thinks it will need to fight future wars with growing energy demands from its arsenal of technologies.

FERC is an independent regulatory agency focused on defining fair and reasonable market prices, setting allowable tariff prices and adjudicating complaints between market participants.   But some now want to assign it a Solomon like role of assessing the impacts and implications of the rulemaking jumble of these other Federal agencies on resource adequate and electricity reliability.  If this sounds to you like a no-win front row seat at a mud-slinging contest, then you understand why FERC is reluctant to get involved.  Ironically, it may actually be the least-worst solution.

Congress passes these laws without a clue about how they will actually work.  They authorize the Federal agencies to adopt rules to implement and enforce the law, but the law is so vague that it is sometimes impossible to interpret Congressional intent. This is why things are so messed up in Washington and why it scores so low in our public opinion polls.  Regulation, rather than defining procedures to implement a clear policy, is being used to write entirely new law and policy.  Then additional regulations like the “endangerment finding on the health effects of CO2” take a law and turn it into a battering ram.  Such a law likely would not have been approved by Congress in the first instance, but it has become de facto law through regulations.

FERC is being called upon to rationalize the irrational.  Do we really want to shut down so many coal fired power plants in such a short period of time that we jeopardize electric grid reliability?  Was it Congressional intent to use regulations to drive up the cost of a legal activity like producing electricity from fossil fuels to the point where it is no longer economic to do so? Did Congress intend to drive up electricity rates to end use customers to pay for the cumulative cost of emissions reduction, renewable energy expansion and smart grid deployment this much?

Do you see what I mean?

All of these rules and regulations have been written by policy advocates who reject any responsibility to balance the cost and benefit of their regulatory actions.  The resource agencies tell us their job is to protect the environment.  They decide alone what methodology to use.  Are they selectively counting the benefits and selectively forgetting the costs?  Is that really their biological opinion or is it their political opinion.

There is no standard methodology for calculating regulatory cost benefit.  There is no administrative law judge responsible for forcing these Federal agencies to own a burden of proving the need for the regulation they propose or the reasonableness of their cost in the public interest. Yet in Federal rules enforcement companies and individuals are often guilty until they can prove themselves innocent.

FERC is being asked to assert itself as an independent arbiter of reasonableness in Federal regulations affecting energy.  By opening a proceeding and taking testimony about the implications and impact of proposed EPA regulations on greenhouse gas emissions and their effect on electricity reliability, resource adequacy the reasonableness of the balance of cost and benefits of the proposed rules, their implementation timing and cost, the industry is crying out for common sense.

But Congress has not authorized FERC to define common sense in Federal rulemaking—-and it may not like the answer FERC gives.  But this is another useful signpost about how our Federal regulatory and rulemaking process is broken and needs to be fixed.

There ends the rant.

By. Gary L. Hunt

Gary Hunt is President, Scalable Growth Strategy Advisors, an independent energy technology and information services adviser and a partner in Tech & Creative Labs, a disruptive innovation software collaborative of high tech companies focused on the energy vertical. He served as VP-Global Analytics & Data at IHS/CERA; global Division President at Ventyx, now an ABB company; and Assistant City Manager-Austin Texas responsible for Austin Energy and Austin Water.

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play