On the weather front, the U.S. hasn’t had much of a break from the extreme heat since we met last month. The system stressors that grid operators are facing around the country continue to hit us all smack in the forehead with the case for taking action. I was encouraged at the FERC-NARUC Joint Task Force meeting last week in San Diego and the discussion around one of these important actions we can take, which is assuring sufficient interregional transfer capability at the seams. I think that idea enjoyed broad support across NARUC task force members. I am optimistic that the Commission will come together to propose a common sense interregional transfer capability reform proposal.
When we talk about the reasons that extreme weather is bearing down on the grid, and about resource adequacy and energy, I think it’s less useful to shore up the blame for these problems and more useful to spend our time thinking about what the solution set is. It’s the market dynamics and so many other components—the ways we plan for the system and the ways that we, as a Commission, can decide to adapt or not to adapt to the reality of the market dynamics. And when we talk about the attributes that the system needs to run reliably and resiliently, what comes to the top of the list for me is flexibility. And it’s the Commission’s job to figure out how to facilitate the flexibility that this system needs.
When we talk about what solutions bring forward flexibility, let’s talk about the whole solution set. That’s the only way we get through this. We don’t get to choose what the right kind of resources are. We are a technology-neutral economic regulator. Our job is to put all the types of solutions on the table. Whether or not those would be increasing security of the fuel supply; whether or not that is increasing connectivity through new transmission development; and whether or not that is taking advantage of energy efficiency, distributed resources, and demand side resources. All of those types of resources can provide the attributes that the system needs. Some of the opportunities to get at those solutions live within the jurisdiction of FERC, and some of them live within the jurisdiction of states. We need to break through this patchwork of jurisdiction that makes it hard to fix these types of complex system-wide problems. I look forward to continuing to work towards that solution set.
One important aspect of that as we think about solutions from the Commission’s perspective is cost. I want to take a moment to highlight the Commission’s upcoming transmission cost management technical conference. I view this conference as integrally tied to any final action on the transmission planning front and the proposal that we have put out before you. I hope it will provide the Commission with more specificity around several good ideas for improved cost management that arose in our ANOPR record, including one idea that is particularly compelling to me, which is the potential for an independent transmission monitor to facilitate greater transparency. I hope we get a better understanding of the scope of cost review that currently exists in states around the country and where and how and if greater cost scrutiny is required, as we figure out the solution set to this modern grid. We need your input to build out these ideas, so as you’re thinking about your comments in the transmission planning NOPR, please don’t hesitate to nominate yourself to participate in the cost management technical conference. The deadline for those nominations is on Monday.
E-1/E-2
I’m happy to vote to support both of these orders.
I want to emphasize something that the Chairman said on E-1. I think the proposal does a good job of explaining the inability of an RTO to access credit-related information from market participants and other regional markets, which poses a risk, i.e., that mutualized risk default is not sufficiently protected against. The question for me, and one that I hope stakeholders will specifically focus on, is whether the proposal goes far enough to ensure we actually fix the problem we identify. It is unclear to me—and I’m looking for your input—whether merely permitting the RTOs to share information, and not proposing to require that the information is actually shared in at least some set of circumstances, will adequately protect against mutualized default risk. Thanks to the work of the team.
M-1
Thanks Gabe, Andrea, and Team. It is an intuitive no brainer that entities engaging in FERC regulated activities should use due diligence to provide accurate information.
I want to emphasize something the Chairman said—the quality of the Commission’s decision-making in a wide range of policy, regulatory, and adjudicatory matters hinges on the quality of the information we receive. The integrity of the markets we regulate also rest on the accuracy of the information market participants provide. A broader duty of candor, which is not unique across regulatory agencies, will help to inspire greater confidence in energy markets and hopefully increase market participation or the opportunities for market participation.
Now, this is a proposal. We ask a question in the proposal—are there types of individuals or entities who should be excluded from this duty of candor obligation? We’re not going down the extreme path if the proposal stays how it is. We say specifically in the NOPR that that is not the intent of the proposal. And we ask a question about if and how we should limit or put any parameters on this duty relative to the concerns that my colleague expresses.
Thanks to Staff for the work and we look forward to your input.