State and federal regulators should keep trying to cooperate even in the face of tension over issues like electric storage and grid security, departing Federal Energy Regulatory Commission member Cheryl LaFleur said Monday.
Technology and climate policy are key drivers of the convergence of state and FERC work, LaFleur said at a meeting of the National Association of Regulatory Utility Commissioners in Indianapolis. "I think it's going to require a lot of cooperation and working together and trial and error, and maybe even going back and forth to courts ... to figure that out," Lafleur said.
Speaking of legal actions, NARUC President Nick Wagner noted that the organization recently took FERC to court to challenge aspects of Order 841, FERC's rule to help energy storage participate in power markets.
"NARUC believes very strongly that the states have rights over the distribution network," Wagner said. But while FERC may make decisions that the states do not agree with, "it doesn't mean we are going to take each other off the Christmas card list," he said.
NARUC CHALLENGE
NARUC recently asked the DC Circuit Court of Appeals to review Order 841, saying it denies states the ability to fully manage energy storage resources that are connected to distribution facilities or located behind the meter.
Technological developments are making distributed resources at the retail level collectively look like a wholesale resource, LaFleur said Monday. And those developments are stressing the market, stressing the methods regulators use to pay for resources, and stressing traditional areas of cooperative federalism, like regulation under the Public Utility Regulatory Policy Act, she said.
PURPA requires utilities to buy power from qualifying facilities -- typically small cogeneration and renewable power plants -- at the full avoided cost of replacing that power with other generation.
Some states that are in power markets never think about PURPA, but other states like Idaho and Montana are deeply interested in the issue, LaFleur explained on the sidelines of the meeting. One issue that is front of mind is what flexibility states have on setting the avoided cost and whether FERC should provide more guidance on the issue, she said.
CLIMATE ACTION
In the face of federal inaction on climate, more states are setting their own climate goals, LaFleur noted. And those state actions are putting more pressure on regional markets and infrastructure approvals. "Things that are regulated at FERC are being very, very heavily impacted by the states," she said. For instance, state denialsof Clean Water Act permits for pipeline projects are an example of state policy affecting federal siting decisions, she said on the sidelines of the meeting.
Regarding security, LaFleur noted that FERC sets rules for the cybersecurity and physical security of the bulk electric system. "But those are only as good as the security of the wires that connect the bulk electric system to the ultimate consumers," she said.
