Resources for the Future (RFF) is releasing a new episode in its Policy Leadership Series Podcast, which highlights conversations with leading decisionmakers on environmental and energy issues at RFF’s flagship Policy Leadership Series events. In this episode, RFF President and CEO Richard G. Newell sits down with Commissioner Allison Clements of the Federal Energy Regulatory Commission to discuss the role of the agency in modernizing the grid, the importance of planning for resilience and reliability as the energy sector decarbonizes, and more.
Visit the event webpage to watch a video recording of this conversation.
Listen to the Podcast
- “If you think about planning for a future transmission grid, that is going to be expensive and is going to take buy-in from a lot of people and is going to take the development of new infrastructure—which is hard. Regardless of what kind of infrastructure it is, you’re going to impact people in that process.” (18:57)
- “I have said—and I’ve heard my colleagues say similar things—that [FERC’s backstop siting] authority is not the end-all be-all. In fact, it’s something we’re all kind of letting sit for a minute, because that’s not how we’re going to get to yes on building cost-effective transmission in this once-in-a-generation need to make a significant investment in our electric grid. We get to yes by working with states toward outcomes that they think makes sense and that they buy into, as well as all other stakeholders, including customers.” (26:40)
- “There is a lot we can do in the planning timeframe related to the development of grid infrastructure to help on the resilience front. One of the lessons learned from Winter Storm Uri was that the interregional transfer capability, i.e., the ability for neighboring regions to help export power to the regions who were struggling in the cold while they could—while they themselves weren’t struggling—was critical to keeping the lights on, or keeping outages to a short duration. Texas, with its limited interconnection, didn’t have that opportunity. We saw what happened there, and there was a big difference between these regions. That’s a lesson that can then be applied into the planning timeframe.” (37:38)
The Full Transcript
Elizabeth Wason: Welcome to the Policy Leadership Series Podcast from Resources for the Future (RFF). In every episode, leading global decision makers speak to RFF President and CEO Richard G. Newell about big environmental and energy policy issues.
In this episode, Richard speaks to Allison Clements, who recently started her five-year term as a commissioner of FERC, the Federal Energy Regulatory Commission. Their conversation took place on January 25.
Richard G. Newell: Thanks so much for joining us.
Allison Clements: Thanks for having me, Richard.
Richard G. Newell: Absolutely. I'd like to start by discussing your professional experiences leading up to FERC. Your career in the energy sector spans two decades. You've worked on the electric grid and related issues with utilities, independent power producers, developers, lenders, nonprofits, and philanthropies—a really broad experience that you bring to FERC. How have these experiences shaped your views, and how might they further inform and guide your goals as a FERC commissioner?
Allison Clements: Sure, I did do a lot of different things in my career leading up to this current role. And part of that is because of the era we're in as an energy sector, and that is the transformation and the transition I came in.
The transition's been going on for a really long time. It started speeding up at the moment I was getting my professional legs under me. As an attorney in private practice, I was anxious to get on the front end of the transition in a world where law firms, consulting firms, banks, other types of equity shops, and the energy companies were not yet leaning in, if you will, to the transition piece. And so, after getting my grounding at law firms, I realized I wanted to go look at this from a policy perspective—a systems perspective.
I had this luxury, really, of being at the Natural Resources Defense Council for a decade, where, after spending some time as the organization's general council, I moved over back to my roots in energy regulatory law. I got the chance to say—not as a market participant, not as a particular state regulator or interest group—it was really okay if we want this to work.
If we want this energy transition to work, and we're looking at FERC, which is the federal agency responsible for economics—the economic regulator of all electric systems, as well as gas responsibility responsibilities—you've got to figure out how we make this fair and how we protect customers in the process. So, that's the path I took.
I left the energy field only because I moved out to Utah for six years, and the commute was rough, but then I did have the chance to do my own consulting work and work in philanthropy. Again, it was just another perch from which to look at this energy transition and say, “How do we facilitate this responsibly as quickly as we can, but continue to protect customers and reliability in the process?” Because it doesn't work. otherwise.
I never thought I would be a FERC commissioner. I think because of the time of the transition, when I started making decisions about my career, I assumed I would be shutting off doors that were state regulated. Of course, the world changes a lot in 20 years, and here we are. I feel really lucky to have a chance to be in this role for now.
Richard G. Newell: Thanks so much for sharing that. And that does give us some additional perspective on what you bring to your time as commissioner. So, tell us a little bit about your time at the commission—what it's been like so far given your background and depth of experience. I'd be interested to know whether or not what you've experienced has surprised you. And maybe give us a sense of what a typical day in the life of a FERC commissioner looks like, if you don't mind sharing an example.
Allison Clements: Sure. Well, starting any job in COVID is weird. I finally started coming into the office just to make sure this was all real—that I'm actually a commissioner—even though the agency is still closed. So, it makes for a different kickoff to the role, but I'd say no day is typical.
We spend a lot of time in the weeds in our decision making process. There's five commissioners. Because a lot of political attention gets put on the agency these days, we often say that 80 percent —(don't quote me on that percentage) of what we decide is unanimous. There are a lot of just nitty-gritty rate-design issues, whether it be for a natural gas pipeline, a transmission line, an oil pipeline. And that takes a good amount of time.
We get to spend the rest of the time how we like. I've got priorities that for me (I'm lucky) align with Chairman Glick’s priorities right now, in that the commission is spending a lot of time on them, and I have a chance to lean in. Right now, some of those include transmission and interconnection policy, which many of you are aware we’ve got a big proceeding open on; also, natural gas pipeline application review and how we might reform that, to update it to reflect the realities today.
We might get into this more, but another priority is just thinking of the ways that the impacts of climate change are impacting the systems, such that we hurry up and ensure we have the reliability standards in place—the planning mechanisms in place that are equipped to handle the challenges coming our way and that will increasingly come our way.
Richard G. Newell: I think you've started to jump into this a bit, but give us a sense—which I think you've started to do—of your goals as commissioner. What goals maybe you set for yourself and your time in the commission, which obviously also relates to the kind of the commission and where the commission overall is headed.
So, what new directions would you like to see the commission head in as well—your personal goals and also for the commission as a whole?
Allison Clements: Sure. Five years is not a long time for a term. My term, actually—I started a year after the clock started ticking. For all five of us, we're five individual commissioners with our own set of perspectives. Regardless of what political party we come from, we have different priorities. We share a lot; we also have things we want to emphasize, or not put in that bucket of things that we're going to try and cross off our list during our terms. So, I came in thinking, “Gosh, there's so much to do. We need a modern grid. We need to facilitate the grid of the future.” And then quickly, you have to start choosing between, “Well, should we try and start this docket or this docket?”
I will say one thing that is surprising, to your previous question: The staff at the commission are tremendous. Their collective expertise is—I always knew it would be strong. That's what this agency does. It's really impressive. They have so many hours in a day. And they're only able to prioritize some set of things, and the way that a non-chair commissioner tries to influence those things—you know, we each also have our own perspective on how we try and get that done.
So with all of that said, to me it's just catching up these rules. We have a transmission grid that was in large part designed—not built, but designed—over a hundred years ago, right? The basics of it haven't changed. You look back to times of significant investment in the electrical grid, and it came in for moments over generations when we built up the grid, but a lot of it is 50-plus years old. And the way that these really specific rules about how resources interconnect; what the requirements are for that interconnection; who pays for which part of the interconnection; what the reliability standard means for resources that are […] instead of conventional resources or traditional resources that hooked up. All of these things are a little bit out of date. And for 20 years, the commission has slowly but surely been trying to take pieces of it and update the roles, so they work. They don't have to do the same for every resource type, but they need to be fair. There's just a long list—transmission is at the top of it—of those types of things that need to get done.
The other issue priority besides transmission is on this idea that yes, we are economic regulators. And yes, our job is to, on the electric side, “ensure just and reasonable rights and avoid undue discrimination” (which is a mouthful), and we have a similar responsibility on the natural gas side. But the decisions we make impact people, and they increasingly impact people.
When you think about starting with these laws and applying the facts to the law, when you're making any given decision—in my mind, raising up the issues of equity for people needs to be part of how this agency successfully regulates on a going-forward basis.
Richard G. Newell: Yeah, that's really helpful. You brought up the energy transition earlier. I want to bring us back to that. So, turning to FERC's role in the energy transition and focusing on decisions that you expect to see coming over the course of this next year, what do you see coming in terms of key decisions by FERC on the energy system—whether it's the grid or natural gas or oil infrastructure—over the course of this year?
Allison Clements: That's a great question. To put a fine point on the transmission piece, we are going to take action, hopefully coming out of a broad record that stakeholders have engaged on over the last year. What reforms relative to transmission-system planning, interconnection, and cost allocation are required to continue to ensure that the system works fairly and is paid for from a fair perspective. I think that we will see action on that in the near term—in the coming months, that's going to be an important place for stakeholder engagement.
And it's important to say that there are lots of energy-transition, climate-related, clean-energy-related things that filter into the actions that the commission takes. But our job is to facilitate low-cost, affordable delivery of electricity. And part of reforming transmission is because we have a set of low-cost resources in the form of wind and solar that are far from where people live.
If we make smart investments in transmission infrastructure, we can deliver those resources. So, the total cost of transmission, plus generation of electricity delivered to customers, is global overall. That's the goal. All of those other things come into play, because that's where the market is going, and we need to keep our system caught up with the market. Otherwise, I also think you'll see action coming out of the commission on what we call our “certification policy statement,” which is the policy that has guided the commission in considering applications for new interstate gas pipelines—as well as, related to that, the way that we consider requests for LNG facilities, which has a different statutory standard for review. I think you'll see action on that, as well.
Richard G. Newell: One of the things that you just brought up, and one of the areas of interest—and I think it's fair to say considerable debate—is FERC's role in natural gas infrastructure permitting. Give us a sense of some of the key issues that you see FERC grappling with in terms of accounting for greenhouse gas emissions in natural gas infrastructure permitting. And also related to that: Do you see a potential role for the social cost of greenhouse gases and monetizing those impacts? There's physical emissions, and then there's potential monetization of that. What are you thinking about there?
Allison Clements: There's a lot there; we can spend the rest of the time on this question.
Under the Natural Gas Act, the commission's responsibility is to consider whether or not a certificate of public convenience and necessity—which is approval for a proposed gas pipeline—is in the public interest. We have a proxy test for whether or not that standard is met and that the needs analysis that the commission goes into. And what happens is the applicant who wants to build the pipeline comes in, and effectively at this point, they show us that they have contracts for offtakers. And if they have contracts for offtakers (this is a mass oversimplification) they typically, historically, have been awarded a certificate. Once that certificate is granted, the pipeline company can then use that certificate to get eminent domain authority to go in and take land to the extent it can’t get to an agreement with landowners to build that pipeline.
The policy that we follow (short of regulations, it’s a policy) stems back from 1999. So, in 1999, hydraulic fracturing for gas was not commercialized. We didn't have this real boom in natural domestic gas production by an order of magnitude. We're still operating under this late-’90s era, where Congress wanted to deregulate parts of the gas industry. We're not in that era anymore. It's a different time, and it's a different place. And the policy statement, in my mind, needs to be modernized. What does that mean? How do we think about whether or not a new pipeline is needed? We have a wholesome record, thanks to stakeholder participation, weighing in on that question. And the commission is thinking about next steps coming out of that.
There's a need determination. If a pipeline is needed, and this is all related, there's a NEPA analysis. And so, there's a question about whether or not greenhouse gas emissions related to pipeline infrastructure development lives in the needs-determination piece. So, in light of changing policies across the country—in light of the market dynamics, demand dynamics for this global commodity—should we be taking those things into account—determining in the first place whether or not we need the pipeline? And then, if we need the pipeline, what does the NEPA analysis include? And of course, the commission’s NEPA regulations are to follow the CEQ regulations.
So, in a lot of ways, we're looking to other branches of government to tell us how to consider and whether to consider greenhouse gas emissions. There's lots more to say about that. It's been controversial, but that's the point we're at right now.
Richard G. Newell: That's really helpful clarification—even for those who follow it—the distinction between the needs analysis and the NEPA work. Just to kind of review that back, it sounds like the place where there's more opportunity and likelihood of change or reform or updating is on the “needs” part, because FERC looks more toward a CEQ and broader federal regulatory guidance around NEPA for that portion. Is that correct?
So, for example, just to focus in: I mentioned this issue about the social cost of greenhouse gases. Is it right to say that would more likely come in the NEPA part, if in fact that was part of broader NEPA guidance? Or could it also come in the “needs” part, if one was taking a societal-need perspective, in addition to a local-offtaker-need perspective?
Allison Clements: Sure. Certainly we have stakeholders commenting on the record to the latter, to the idea that GHG emissions and the use of whether and how to monetize the impacts of GHG emissions should be considered in the needs. That is an open question. The courts have been clear that on the NEPA piece, the commission (at least in some set of circumstances) hasn't fulfilled this responsibility to consider the impact of reasonably foreseeable environmental impacts, which includes GHG emissions. And again, the social cost of carbon is a tool. The government has an interim approach, and you and others are working on what might come from that. The commission finds itself in a place where we need to be making these decisions.
Now, we appreciate these moving pieces in a lot of ways and find ourselves on the forefront (from my perspective) on some of these decisions where the path is not quite important.
Richard G. Newell: That's helpful. So sticking a bit with the interplay of FERC policy and climate policy that may be coming from other parts of government: In April of last year, FERC issued a policy statement clarifying the commission's authority to incorporate carbon prices into wholesale electricity markets where those carbon prices were being determined at the state level. So, do you expect that FERC's policy statement will encourage more states to adopt carbon pricing? And have you seen any significant changes or signs of change coming, in the month since the policy statement was issued?
Allison Clements: I haven't followed the states as closely, but I have been looking at regions like the New York Independent System Operator, where discussions around carbon pricing had taken place at the PJM, which is the Atlantic region having conversations. I know they're happening in other places. To me, that carbon pricing policy statement memorialized what is true, which is, if a region wants to bring to the commission tariff rules—market design rules that incorporate a value, a price, on carbon—the commission can consider that. It hasn't been done, and to be frank, my office hasn't made having those conversations a priority in the near term, relative to thinking about this transmission priority and this gas policy priority. But it remains to be seen whether or not that helps any set of stakeholders—any sort of states in regions to take us up on the invitation to bring it forward.
Richard G. Newell: Yeah, thanks for that update. So, I want to turn a bit to demand-side resources. In recent years, several FERC orders have reduced barriers for demand-side resources to participate in wholesale markets. What do you see, looking forward, for demand-side resources playing a role in the energy transition? How have past FERC orders enabled the participation of the resources, and is there additional work for FERC to do on this front?
Allison Clements: I'll answer that question first as a FERC commissioner, and then just as someone interested in figuring out the effective way to facilitate this transition.
We do have some compliance filings out before us on one of the actions you're referencing, which is order 2222. So, we can't speak specifically to how that's going, although to say the regions are in the compliance phase of following this set of rules that was designed to remove barriers to participation by demand-side resources in wholesale markets. There's a lot packed into that. Can the commission do more? To my mind, yes. And certainly there's a lot to do on the market side, on the participation body’s resources in regional markets. There's also a lot to do on the planning side.
This is a really tough nut to crack. If you think about planning for a future transmission grid, that is going to be expensive and is going to take buy-in from a lot of people and is going to take the development of new infrastructure, which is hard. Regardless of what kind of infrastructure it is, you're going to impact people in that process.
How do you get all you can get first, out of the demand side? How do you make demand more flexible or take the opportunity when there are transmission investments that could be avoided by more cost-effective demand-side opportunities, like energy efficiency and demand response, and you name it? How do we consider those things effectively? When states have jurisdiction over those resources, in large part, and the commission's jurisdiction over the transmission planning process—they don't really run into each other. It's almost like they stop. Then what do you do with this thing in the middle that we're not quite able to manage? That's something that I spend a good deal of time thinking about.
Outside of that—and this is not necessarily a commission role, so I'll take off my day-job hat for a second—is this fight that maybe is passé at this point, maybe it’s not, between building out utility-scale transmission in the macro grid, or doing it all in a distributed fashion. There still is no study that suggests that one of them can do it alone. It is still a yes-and proposition as far as I can tell. We have to get the system flexibility on the demand side to support the variability of the resources we're trying to bring online. It's really critical. And I think we could—there's an opportunity to make progress with the state and the FERC jurisdictional utilities and regions that care about these issues. I think it's a question for resilience, it's a question for reliability, and it's a question for flexibility to complement what's becoming an increasingly predominant portion of the resources.
Richard G. Newell: Yeah. So much of this—even the different aspects of this—come back to transmission, and you made that connection for us. Again, this has come up a couple times, but I want to dig a little bit deeper. As you stated earlier, Commissioner Clements, expansion of transmission lines that can connect power-resource-rich areas to demand load centers is going to be crucial for the clean energy transition.
As you stated, FERC is currently considering new methods for addressing transmission expansion and allocation of costs associated with that expansion. What types of specific solutions is FERC considering, and how do you see these changes facilitating the energy transition? And I'm sure that there's multiple levels of detail that you could go into here, but at a high level, where do you see some of the key new approaches that could be incorporated by FERC?
Allison Clements: I'm thinking—because we're in the weeds on it right now, I don't want to tip our hats prematurely, as we figure out what some of the answers to the questions you ask are. But, traditionally, you had a backbone transmission system, you needed to interconnect a gas plant or a coal plant or whatever plant, and you hooked it up. The cost of hooking that up, which was sitting relatively close to load—in some cases, unfortunately close to load. —You hooked that up, it gets paid for, and the cost gets passed through to customers.
For now, we’re in a time where, as you said, you've got these resource-rich areas, and you think about the opportunity to build transmission more efficiently, so that a whole bunch of resources know where to go. In a perfect world (and this, again, veers from some FERC jurisdiction), you’d have some sense of where the siting difficulties—from an environmental perspective, from a cultural perspective, from an historical perspective, and any other perspective—you’d have some sense of how to build transmission that avoids (to the extent possible) those issues, and then draws people to it.
If you can build the transmission in the Bipartisan Infrastructure Law—DOE has reviewed authority related to the corridor development—is that something that regions can do on their own, appreciating that that is a way to save costs for customers? That's a very high-level idea that I think, in concept, is a great idea. The people who are looking to build the transmission get to build it, it’s efficient, so that the cost of developing resources around it is lower than it might be other places, picking high-productivity areas, et cetera, et cetera—so, that's one area.
And then, who pays for all of this? Who pays for all of this when you're in a new world where—I think 10 or 12 years ago, when the commission issued our last big transmission rule, Order 1000—public policies really were the driver of clean energy resources, but we're a decade more later, and now it's just economics.
The cheapest resources also are the variable resources, or in some combination are variable resources and batteries. So, it's no longer a question just about which state pays for which state's public policies. It's, How do we pay for low-cost delivery of electricity? Because those are the resources that are coming online and provide the opportunity. You can't cabinet all in the context of public policies. It's no longer there. We've gone well beyond that with market dynamics, utility commitments, corporate commitments, customer demand, and et cetera. That's what we're trying to do this time. We're trying to get it right with being fair, but still not missing out on the opportunity for customers.
Elizabeth Wason: Each episode of RFF’s Policy Leadership Series Podcast is made possible by listeners like you. This series provides thoughtful conversations with leading experts to better connect and inform our community on the latest environmental and economics issues. And you can help us. By supporting RFF, you join us in our mission to improve environmental, energy, and natural resource decisions through impartial economics research and policy engagement. Learn more about contributing to RFF today by visiting rff.org/support.
Richard G. Newell: One of the things that you mentioned is the Bipartisan Infrastructure Law. Is that affecting in any way FERC decisionmaking? Obviously, that's putting in place new resources and perhaps encouraging deployment of transition with incentives. Does that in any way affect FERC decisionmaking?
Allison Clements: Yes. So lots of caveats—I mean, in some ways, it's TBD, right? The Department of Energy put out a notice of intent or inquiry related to some things that are transmission. Questions are out there about—and I look forward to engaging and understanding better—how a national transmission planning study might filter into interregional or regional plants for jurisdictional transition planning or not. You know—is that outside of that context, and same with the conversation around corridors. There's a lot of things there—a lot of opportunity for appropriate interaction between the agency processes and to ensure that they're talking to each other. There's also new authority—refreshed backstop siting authority, for example—which was if the state denies the certificate public convenience necessity for a transmission line, that the commission has a path to approving it.
I have said—and I've heard my colleagues say similar things—that that authority is not the end-all be-all. In fact, it's something we're all kind of letting sit for a minute because that's not how we're going to get to yes on building cost-effective transmission in this once-in-a-generation need to make a significant investment in our electric grid. We get to yes by working with states toward outcomes that they think makes sense and that they buy into as well as all other stakeholders, including customers.
One thing the commission has done is establish a FERC mainly led task force, where we've got representatives from 10 states and all five FERC commissioners together. We've had one meeting so far on planning. We're having another meeting coming up in February. It's an open public meeting, where I hope we put some of these intangible issues and sticky issues on the table outside of contested proceedings, so that we don't have to say, “Oh, but we've got this authority over here to make decisions.” Yes. That will arise, those times will come, but let's figure out a way that we have a path forward on transmission planning that people can buy into before we have to get to that authority.
Richard G. Newell: Yeah. I actually have an audience question that's directly relevant herem so I'll just read it: What responsibility should FERC have for locating new transmission lines, and what should remain with the states? (I guess there's a “should,” but there's also—I guess—a “does.”
What responsibility does FERC have—or authority, for that matter? You actually brought up not only FERC as a federal body and states, but also you brought up regional, which kind of lies between the two. Maybe say a little bit about that?
Allison Clements: Sure. So you've got FERC, and then you've got these regional transmission organizations, which utilities have gotten together and—voluntarily or by direction from their states—joined together their systems and said, “Let's have one independent party run this portion of the grid independently.” Those are ISO in New England, NYISOin New York, PJM in New Jersey and the Mid-Atlantic, and there's a few more—SPP and MISO and CAISO, and, of course, Texas.
States have authority for the siting of transmission. That has always been the division. The commission's authority over ensuring just and reasonable rights for transmission and avoiding discrimination includes within it, as has evolved over time, the authority to require regional transmission planning—utilities that own transmission to work together, either within those independent regions that I mentioned, or in the places where they don't exist—just utility to utility, to come up with a regional plan. And so that, by definition—having that authority overlaps in ways with the state's authority to approve the siting of new transmission. To my mind, the most practical way forward is to have those processes talk to each other. What is the right way for the states to have input at a point in the transmission planning process, sufficient for red flags to get raised, and say, “No, that's not going to go. That transmission path will not go in that state.”
The problem is: One, states then become the adjudicators at a later date and sometimes have to be careful not to weigh in, in incorrect ways up front to the federal process. Another problem is: At the transmission planning process, you don't necessarily know the route of a line that might be needed to address a particular transmission system need. So, there's a lot of issues that we're bouncing around and brainstorming around to say, “Okay, we have barriers, but let’s at least get these processes talking to each other as much as possible.” And what does that look like? And does that look the same around the country? Or might it be different?
Richard G. Newell: Great. I want to dig into another issue, which for FERC followers has come up a number of different times. There are some FERC orders, as you know, that have enabled greater deployment of clean energy resources, and others that have—at least to some folks’ minds—done the opposite. There's the much-debated minimum offer price rule, or MOPR, order which required state-supported resources to be subject to a minimum price floor in PJM’s capacity market. So, the MOPR order is now in the process, I understand, of being replaced with a focused MOPR?
Allison Clements: Yeah. It's pending, so we can't talk specifically about it.
Richard G. Newell: All right. So, I guess you preempted my question, which is: Can you talk a bit about the new MOPR? And I guess the answer is no, you can't talk—or can you say anything about the issues that might be considered in thinking about a new MOPR, or why there is consideration of a new MOPR?
Allison Clements: I'll raise it up a level of generality and say: another thing that these regions do is facilitate regional energy markets and the markets for ancillary services, and in some regions' capacity, which is a forward payment, ensure availability at some time in the future. It is hard to make changes to market rules, as it is in any market, right? And because of the change in resource mix and the services that the grid needs to function reliably and efficiently, the priorities for the rules that inform those services need to evolve. And there is a lot of effort around, What does that mean? One common concern is that when fuel resources like solar are so cheap that they bring down energy costs, how can marginal generators recover their full cost? The prices keep going lower and lower. In my mind, that's not impending doom—demand-side resources have the ability to participate.
And then we also need to define the services that a system needs. We need system flexibility, and how should we pay for that, so that the market participants, whatever type of generation—supply-side resources or demand-side resources—might be, how can they compete to provide that service?
But we need to evolve these markets. And these markets have grown up very regionally—the design in New York and New England and PJM, you have some form of a capacity market, which is a three-year or one-year forward market, but they all grew up with their own quirks and changes and stakeholders’ compromise. So what do you do to—as a region from their perspective as participants in those markets, and from our perspective as the regulator of those markets—to evolve that design in a way that strikes some balance—it won't be the perfect balance—between regulatory certainty over time and the ability to change to the services that the system really needs to run effectively and cost-effectively while regions are on a different point in their path and the energy transition? How's that for the plan?
Richard G. Newell: Yeah. Thank you for addressing the question to the extent that you can without getting into too much specific detail, but I want to switch gears a little bit to talk a bit about grid resilience, expansion, and modernization. And over the years, a central focus of electricity policy has, of course, been reliability. Today, we hear an increased focus around resilience. So, please give us a sense of your thoughts about what distinguishes resilience from reliability, also how they’re linked, and how are they relevant for the broader planning process and the future of critical infrastructure?
Allison Clements: Sure. That's a lot—also, these are big questions.
I had the good fortune of serving with your board member, Sue Tierney, on the National Academy of Sciences committee, back in 2017–2018 or 2016–2017, on resilience of the electric grid. That effort—which was a report that Congress requested, and most of the members of that committee were engineers—was a very straightforward definition of what resilience is. It's the ability to prepare for (in a way that avoids) long-duration outages, the ability to withstand them when they're happening, and the ability to recover from them when they're done—and then it's the loop back to help it in the future. All of that happened right before the DOE issued what was, at the time, a politically controversial composed rule related to resilience and ensuring fuel supply on site. But I feel like we've come back now to just the good, old-fashioned engineering definition of resilience.
We have to be able to survive—and more than survive—through these experiences. You know, I think Noah said that there were 21 billion-dollar-plus natural disasters or extreme weather events in 2021, which just emulate from the commission's perspective. Certainly one that stands out there were the forest fires and the impacts there, as well as hurricane other events.
These stressors are landing on a grid in transition, right? Resilience has to rise up, and I think we shouldn't get caught up in whether it fits into the exact definition of reliability as it has been put into the NERC standards, to which participants in the bulk power system are subject, or whether or not it's an add-on or it's a real need. And there's a need on the bulk electric system side for which FERC has responsibility. And then, of course, there's a lot of need on the distribution side, for which states have responsibility.
There's nothing more important. We learned so much about it in the Winter Storm Uri situation from the straight good, old-fashioned reliability standards. For example, winterization, weatherization, and whether or not we have sufficient rules in place there, over to resilience needs and a refresh of a conversation around coordination between the electric industry and the gas industry, when it comes to regions that have a high percentage or a material percentage of power generation fueled by gas. From there, there's these critical infrastructure questions. I'm happy to say more about it, but I'll pause there.
Richard G. Newell: Just to dig a little bit deeper, specifically on climate: To what extent are future risks and changing risks, that might be due to climate change—we've certainly seen many extreme events, also scientists agree that looking forward, it's likely that it will get worse—so, to what extent does that kind of forward-looking knowledge about the possibility for the future issues of resilience to be even greater than the past? How does that enter, or does it enter, into transmission planning and reliability planning? Is that something that shows up in the FERC decisionmaking process?
Allison Clements: There is a lot we can do in the planning timeframe related to the development of grid infrastructure to help on the resilience front. One of the lessons learned from Winter Storm Uri was that the interregional transfer capability, i.e., the ability for neighboring regions to help export power to the regions who were struggling in the cold while they could—while they themselves weren't struggling—was critical to keeping the lights on, or keeping outages to a short duration. Texas, with its limited interconnection, didn't have that opportunity. We saw what happened there, and there was a big difference between these regions. That’s a lesson that can then be applied into the planning timeframe. How do we ensure that we have sufficient transfer capability? That particular question is not something that's currently in planning, but future-looking planning can do a lot.
And then there's the unfortunate lessons we're going to continue to learn on the operation's timeframe, because we're going to do our best, in the planning timeframe, to ensure that we can withstand these events—and then they're going to happen, and we’re going to see where we failed. It's this constant effort to keep up, and America is doing a lot of work on this front: the North American Reliability Corporation that just put out a long-term reliability assessment gets at some of these issues. And there’s a lot in there.
There's a lot to do. I would say, it doesn't matter what agency in government you work at right now: these impacts, this need for climate resilience, is high—it has to be a high priority. And so, yes, it is a high priority at the commission. We are working on it, I think, as are utilities themselves—DOE, DHS and others—and there's more we can do.
Richard G. Newell: If this isn't a quick question, we'll just move on—but what kind of a time horizon does FERC or NERC use for thinking about these issues? Does it go out a few decades? I mean, is there like a set timeframe through which you would look?
Allison Clements: I would answer that more on the planning horizon. Certainly, as I mentioned, NERC's long-term assessment looks forward (and I'll get the number of years incorrect). One of the questions we asked in the Advance Notice of Proposed Rulemaking—the issue on the transmission planning side—was how many years forward should planning look? Of course, uncertainty starts to creep in, as it does in any planning, relative to 20-plus years. But there's lots of ways to discount what you think the likely scenarios are, relevant to taking the actions that we can take today to start planning for those things. On reliability standards, not as much. And I think you asked a good question. There's lots to explore there, but in the transmission system planning.
And then, remember: we're in a transition time. If these 20 or 30 state laws, corporate goals, and targets that they're reporting in their SCC filings and customer demand continues on the path it's on, there's not an end state, but there's certainly a more continuous state—we're operating a different system reliably. The question is, What are the steps on the way to that time?
Richard G. Newell: Thank you for that. I want to turn to a different topic. President Biden, as you know, made environmental justice a priority for his administration and issued an executive order early on in the presidency that directs federal agencies to make achieving environmental justice part of their missions. Could you say a bit, Commissioner Clements, about how you see FERC decisionmaking in operations changing or evolving to address environmental justice and equity issues? And for those of us who watch some of what's going on in FERC, this has also shown up in some recent deliberations, as well. I think you brought it up earlier. So, say a little bit about your thoughts on that.
Allison Clements: Sure. I'll start with (and I should have said this when you asked the previous question) when things get bad, we know that the communities that bear the brunt of the worst impacts are those that are already marginalized. Whether it be environmental justice communities or disadvantaged communities, period. The commission has made controversial decisions relevant to the treatment of the consideration of environmental justice communities, when we think about infrastructure permitting—in particular, on the gas certification side. We also have authority to approve hydro licenses and re-licenses, but the conversation has largely taken place in the proposal for development of new gas infrastructure. We have taken some steps on that side. We can do a better job. Chairman Glick has certainly taken important steps in hiring a senior council for environmental justice and supporting development of the commission's Office of Public Participation, which is something that's been on the books—actually, in statute for several decades, but for various reasons didn't get stood up and is now there. That doesn't fix what has already been done. If they look for improvement, we hope—we intend more than hope—but there is a real need to ensure that, when you get back to our conversation around need and NEPAanalysis, that we're engaging in sufficient consideration of the impacts of the certifications that we’re approving broadly on the electric side.
It's also related—the commission's connection is more attenuated, because we don't have siting authority, in large part, for transmission infrastructure. The impacts of those siting decisions are not things that come to commission; however, everything the commission does has some eventual impact on costs—on price—that will eventually show up in customer utility bills. And we know that the energy burden for low-income families in particular is disproportionately large. And we are working. I think about this every day: How do we better allow those realities to inform our decisions?
We make decisions based on what's in the record; we make decisions based on the parameters of what the law allows us to consider. Within the parameters of what the law allows us to consider, there's a lot of facts. How do we ensure that facts on the record are providing as much information relevant to how we make decisions as possible? I think that's something that lots of people in the commission are thinking about right now.
Richard G. Newell: Not being a lawyer, I'm starting to appreciate even more the importance of the definition of the word “need” at FERC, which is obviously a quite general word, and how you interpret that and what's in that needs-assessment seems to touch on so many of the different issues that we talked about today. I'm sure I'm stating the obvious to somebody who's involved at FERC as a commissioner.
Allison Clements: No, you can't say it enough.
Richard G. Newell: Related to this, FERC also, as you mentioned, established the Office of Public Participation last year to facilitate public participation and commission proceedings. So, could you say a little bit about your vision, or the commission at large’s vision, for this office and how it could change the way deliberations and decisionmaking is done at FERC?
Allison Clements: I'll speak to my vision for the Office of Public Participation. I was fortunate to help lead the effort to gather public input on what it should be—where stakeholders want help from the commission. There was a lot of conversation around what the role of the commission might be, or what the role of the office might be within the commission.
To me, it’s pretty straightforward: You have this set of proceedings in which we make decisions. They’re hard to intervene in. You have to do the intervention—you have to figure out how to do it online. You have to follow the right form. You have to do it within, before the right deadline. You have to understand some pretty technical issues that then have more general implications that you're concerned about, and it's resource intensive. We should help people participate in those proceedings. We should have a full record. I had never thought that the office would be an advocacy office.
We now have a new director, and she has her own vision for what it will be. She will take it forward and develop it as it does. To my mind, it's not to create a separate world where we bring members of the public, who are concerned about our decisions—it's allowing them access to our proceedings. And if we have more facts on the record, we'll make better decisions. We won't always agree with everybody who intervenes, and I don't know how often we will—we're only at the point now where we're answering the initial questions about how to get involved, so that remains to be seen. But I think we'll have better decisions, and they'll be more durable if people have the chance to actually constructively participate. There's also a piece of it that I think can be community engagement to communities that are implicated by our decisions.
That is most intuitive on the infrastructure side—on the gas infrastructure side. The role of the office isn't to replace the role of applicants for new pipelines, upon whom it's incumbent to engage with communities in a constructive way—but it is meant to help gather best practices, which a lot companies have an offer on to bring them together in digestible ways, to share them with others, and to help members of communities understand processes and the way that the commission works. I'm pretty excited about it. And I think Elin Katz, who's the new director, who used to be a consumer advocate in Connecticut, is going to be a great leader.
We need good people. And I think, for all of you who have teams that are out there hiring and recruiting: Being a transmission engineer is cool. It has to be, right? We need it. Understanding the minutiae of these policy deviations across states and regions is critical.
And you can combine it with that kind of entrepreneurial startup spirit that attracts so many people to business. There is tremendous opportunity there. As you look at DOE trying to hire a thousand people to implement this law—and then all of the rest of your companies and your organizations and our commission need to hire good people—in my mind, you cannot spend enough time right now on trying to encourage our young people to get into what may otherwise seem like a very uninteresting career path. I think it just has the opportunity to be thrilling.
Richard G. Newell: Well, I think given our time, that's actually a great note to end on, and I absolutely agree—for those of us who engaged in these issues for many decades, while we have spent a long time on it, the amount of work that still remains to be done and the amount of change that is occurring and will be occurring over the next couple decades, is going to require a lot of talent and time. And so, I agree with you 100 percent on that.
Commissioner Clements, my really sincerest thanks to you for a candid and insightful conversation. Thank you so much, Commissioner Clements. It's really been a pleasure.
Allison Clements: Thank you, Richard. I appreciate it. Take care.
Elizabeth Wason: That was Richard Newell, president and CEO of Resources for the Future, in conversation with FERC Commissioner Allison Clements.
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