Chairman Neil Chatterjee left a two-day technical conference with a positive outlook on how the energy industry has ensured reliable supplies despite the coronavirus pandemic, and with a confirmation of his view that more pipeline infrastructure is needed, he told reporters July 10.
"First and foremost, the industry continues to meet its obligations, provide reliable and secure energy. That is no doubt thanks to industry's efforts to communicate with one another, adapt and adjust as needed," Chatterjee said.
In addition, despite changes to electricity load patterns, there have not been problems adapting to meet the load, he said. And he highlighted comments from some participants that thus far there is adequate access to capital and most infrastructure development is going ahead.
But, Chatterjee noted that "multiple panels cited that while there have yet to be issues regarding reliability, maintenance, access to capital and liquidity, that should this pandemic be prolonged, there could be issues down the road."
On pipeline infrastructure, which often faces opposition at FERC, Chatterjee said one of his takeaways was that despite the impact of COVID-19 on production, as the country moves forward, there is a continued need for added pipelines in some regions to provide takeaway capacity and ensure markets move efficiently. Multiple gas industry participants expressed that view during the conference a day earlier. For instance, Cheniere Energy's Anatol Feygin suggested impediments to infrastructure or meaningfully higher costs on the upstream sector could impact the ability for US LNG to be delivered to Asia at a competitive price.
Chatterjee, referring to his own position that hindering pipeline development would be shortsighted and irresponsible, said panelists "did a good job of explaining this in detail."
Regulatory flexibility
In holding the conference, Chatterjee emphasized that the motivation was "in no way to prop folks up who were struggling from the pandemic." Rather, he said, it was to identify challenges regulated entities were facing and "see if there was a need for regulatory flexibility should unforeseen circumstances arise."
Along the question of flexibility, Chatterjee twice drew attention to concerns raised by Matt O'Mahoney of Delta Airlines that the airline sector could have trouble accessing pipeline capacity for jet fuel because of the steep decline in its use of the fuel during the pandemic.
On July 9, O'Mahoney suggested increased flexibility would be helpful in FERC's approach to calculation of shipping history and access to line space because the approach currently uses a trailing 12-month period that could leave the airlines short on pipeline access.
"O'Mahoney was flagging something that merits a deeper look and consideration," Chatterjee said July 10. He described hearing about such concerns as FERC doing its due diligence to ensure reliability and just and reasonable rates.
And he said he agreed with Commissioner Richard Glick that FERC should not use the pandemic to intervene in markets on behalf of generators that were struggling to compete before the virus outbreak.
Among his other takeaways, Chatterjee highlighted suggestions made that FERC could assist by conducting portions of it audits remotely to reduce chances of exposure, as well as the industry's appreciation of FERC's attention to operational issues and the importance of its pandemic liaison.
FERC also heard the repeated message that regulatory certainty is key, especially during the pandemic, and certainly in regard to return on equity in a transmission incentive policy, he said.
He also gave a nod to the importance of outreach to state and local partners in ensuring a safe and resilient energy sector and said FERC will continue to monitor operations and collaborate with industry groups as the emergency continues.
