This piece was originally published in the January/February 2020 issue of electroindustry.
Neil Chatterjee, FERC Chairman
The Federal Energy Regulatory Commission (FERC) has a wide-ranging portfolio of regulatory and oversight responsibilities when it comes to wholesale electricity and natural gas markets. Just as each of us requires 20/20 vision to be productive, FERC needs sharp vision going into 2020 because our work is profoundly important to our nation.
Why? Energy is what makes us strong. In fact, in 2017, total end-use energy expenditures in the U.S. were $1.14 trillion, or 5.8 percent of gross domestic product (GDP). In contrast, defense spending by the U.S. totaled $605 billion, or 3.1 percent of GDP.
The United States gained that strength in part through our ingenuity when it comes to energy production. For instance, thanks to the shale revolution, U.S. natural gas production has reached record levels. And, our exports of natural gas in the form of liquefied natural gas, or LNG, are poised to make the United States a leader in trade with our international partners while also offering environmental benefits on a global scale. FERC has played a critical role in contributing to this success story by reviewing and approving 11 LNG export facilities over the past 10 months.
But our work doesn’t stop there. In the electricity space, FERC is taking several actions to modernize our nation’s electric grid and further unleash the power of competition in markets. Our country is undergoing a rapid transformation in how we generate electricity, resulting in part from the rise of renewables and natural gas. We have also seen a surge in innovative technologies that will significantly improve the reliability, affordability, and security of generation resources, energy markets, and infrastructure. Amid these changes, FERC is working hard to make sure our policies create the right regulatory environment to benefit consumers.
One example of this is the Commission’s efforts to break down barriers that could impede implementation of electric storage resources, like grid-scale batteries. Through our Order No. 841, FERC is requiring organized wholesale power markets around the country to establish rules that facilitate the participation of these storage resources. Our efforts to unleash the power of flexible storage technology will allow for greater competition in wholesale markets, which ultimately offers great benefits to consumers.
Competition—long one of the guiding principles at FERC—continues to prove its importance to the markets we oversee. That’s why we are also working to modernize our decades-old regulations under the Public Utility Regulatory Policies Act of 1978, to introduce competitive pricing and transform our policies to meet today’s realities.
Our focus on competition helps create a regulatory landscape that promotes smart transmission investments. This allows new generation resources to connect with consumers and ensures our nation’s transmission infrastructure continues to be reliable. Our goal is to establish incentives and policies that reflect today’s investment environment while providing the economic and regulatory certainty needed to build the grid of the future. At the same time, we continue to ensure that wholesale electricity and natural gas markets operate in an open and fair manner by providing just and reasonable rates for consumers.
Part of overseeing these markets means ensuring the grid is reliable and resilient. Our national economy depends on having a grid that meets the conflicting consumer demands for both greater interconnectedness and heightened security. The important task of ensuring the system is reliable and resilient depends on continued partnerships in the electric industry. The Commission works collaboratively with those in the industry to establish mandatory cybersecurity Standards. Our transmission system is the envy of the world, and it is our duty to ensure that, through enforcement of these Standards, consumers will continue to enjoy safe, reliable electricity for years to come.
Going into this new year, the Commission must continue honing our sharp, 20/20 focus to address the critical issues facing our nation’s energy system. I am confident FERC is up to the challenge, and we stand ready to help our nation reach its full energy potential. ei