19 States have banded together in a lawsuit against the Federal Energy Regulatory Commission’s (FERC) green energy transition measurements. FERC Order 1920 issued on May 13, gives unprecedented oversight of the electrical grid to FERC. These states believe that this compromises their ability to determine the correct energy sources for their unique region’s grids.
The measure in question is FERC Order number 1920 which states:
“There is substantial evidence to support the conclusion that the existing regional transmission planning and cost allocation processes are unjust, unreasonable, and unduly discriminatory or preferential because the Commission’s existing transmission planning and cost allocation requirements do not require transmission providers to: (1) perform a sufficiently long-term assessment of transmission needs that identifies Long-Term Transmission Needs; (2) adequately account on a forward looking basis for known determinants of Long-Term Transmission Needs; and (3) consider the broader set of benefits of regional transmission facilities planned to meet those Long-Term Transmission Needs.”
This order is set to be effective on August 12, 2024.
In the words of FERC’s Chairman Willi Philips:
“The new rule is so historic that it was designated Order No. 1920, invoking the year that the original Federal Power Act (FPA) first became law and FERC’s predecessor, the Federal Power Commission, was formed."
FERC argues that this is the first-time regional transmission policy has been addressed from the federal level in more than a decade, and the first time it has ever addressed the need for long term transmission planning.
The coalition involved against this order includes Texas, Alabama, Arkansas, Florida, Georgia, Idaho, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Montana, Nebraska, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee and Utah. Texas Attorney General Ken Paxton who is leading the charge stated:
“Biden’s attempt to seize unprecedented control over energy production and distribution is a recipe for disaster."
In its brief, the states argue:
“The rule is not supported by reasoned decision-making or explanation and runs counter to the evidence . . . FERC issued the rule attempting to do indirectly what it cannot do directly: usurp the States’ exclusive authority over generation choices by adopting planning rules designed to benefit remote renewable generation and renewable developers, and shift billions or trillions of dollars in transmission costs from those developers onto electric consumers."
In FERC’s commentary on the order, it makes this comment about the dissent’s opinion:
"The requirement to consider state public policies is part of the much broader requirement to comprehensively consider all significant factors shaping future transmission needs, where other factors, including the fundamental economic and reliability drivers, play a much bigger role. That Commissioner Christie is focused overwhelmingly on the state public policies with which he disagrees does not mean that the same is true of Long-Term Regional Transmission facilities."
This statement shows that FERC does not consider state’s rights to be a heavy matter when balancing multiple factors. From the outside, many states see this as a power grab and a way for the federal government to transition to green energy without going through the proper avenues of each state’s government process. The lawsuit states that this policy “reflects a view of agency action beyond what Congress (or the Constitution) has authorized and violates numerous other foundational principles of administrative law." The lone dissenter, Commissioner Mark Christie, did propose a form of this policy with more state empowerment, but it was voted down.
Christie commented in his 77-page dissent:
“A pretext to enact, through administrative action, a sweeping legislative and policy agenda that Congress never passed. The final rule claims statutory authority the Commission does not have to issue an absurdly complex bureaucratic blizzard of mandates and micromanagement to be imposed on every transmission provider in the United States for the transparent goal of spending trillions of consumers’ dollars on transmission not to serve consumers in accordance with the FPA, but instead to serve political, corporate, and other special-interest agendas that were never enacted into law."
Christie went on to say, “the Final Rule is a ‘shell game’ that requires transmission planners to consider ‘pre-cooked’ inputs that will necessarily result in the selection of green energy projects."
Senate Majority Leader Chuck Schumer (D‑NY) did give a hint to that in his most recent statement about transitioning to green energy:
“We always had FERC in the back of our minds because it could be done without congressional Republican approval."
In the past, members of both parties have tried to use FERC as their vehicle to drive their policy agendas. It should be noted that even former President Trump’s attempt to provide cost recovery for plants with onsite fuel supplies was rejected. FERC wrote that neither the DOE proposal nor comments in the record showed that existing market rules are unjust and unreasonable in that case.
This example brings up one of the biggest problems, which is the vague requirements of providing a new regional planning transition policy, “unjust and unreasonable” can be made to fit any situation in which a party is trying to cram down its preferred policy. The FERC needs to continue its status as nonpartisan and independent.
The other side to this argument is that this extra oversight and planning will result in lower costs for the consumer. But that will not prove to be the case. This will add another level of bureaucracy to the energy sector, causing it to be harder for energy companies to pivot quickly in emergency situations. These new energy sources being pushed through like wind and solar will not hold up in the cases of worsening weather, but energy companies will now be forced to act not based in the best interest of its consumers but based off the federal government’s demands.
FERC needs to limit its scope, and truly act as a nonpartisan agency. The elevation of the federal government over the states involving energy management is both unconstitutional as well as impractical. Each state has its own unique needs and challenges, and only local stakeholders can identify those in a timely manner. If a transition to different energy sources happens, it should be driven by the free market and choice, not government compulsion.