Opening Statement of Chairman Richard Glick:
Thank you, Madam Secretary, and good morning to everyone. I want to start by making a couple of announcements. First, the Glick office’s extended family keeps on getting bigger. One of my legal advisors, Erica Hough, gave birth to a baby boy, Brad Siegmund Hough, on May 3rd. Brad, Erica, her husband Denny, and big sister Clara are all doing well. And, just yesterday, my other legal advisor, Jenn Gordon, gave birth to Chloe Isabella Gordon. Mother, father, and Chloe are also doing well and are resting up. Congratulations to both Erica and Jenn!
Since we have a couple of people out on maternity leave, Jonathan Taylor recently was detailed to my office. Jonathan comes to us from the Office of General Counsel but has also worked in the Office of Energy Market Regulation, Office of Administrative Law Judges, and Office of Electric Reliability – so he knows how this Commission works and what all our acronyms stand for. Jonathan is a graduate of the University of Pittsburgh and Nova Southeastern University Law School. Thank you, Jonathan, for your willingness to help out and for the great work you have already been doing.
I also have an update on our new environmental justice position. On June 1, Montina Cole will be joining the Commission as Senior Counsel for Environmental Justice and Equity. Montina is currently a principal with Jai Green Consulting and also has her own law practice where she spends much of her time on issues concerning climate change, racial equity, and energy resilience. She previously served as a senior attorney with the climate and clean energy program at the Natural Resources Defense Council. Prior to that, Montina worked at several different law firms and also did a stint as a special counsel at the Commerce Department. Montina will be working with a cross-section of offices and staff throughout the Commission to ensure that we effectively integrate environmental justice and equity concerns into our decision-making processes. This is a high priority of mine and I am excited that Montina has agreed to come on board. And I am confident that she will help us fulfill this important mission.
I also wanted to take a moment to comment on the recent cyber-attack against the Colonial Pipeline system. The events of the last couple of weeks offer an important reminder of what is at stake when critical energy infrastructure is compromised. In 2005, Congress gave FERC authority over the reliability of the bulk power system including cybersecurity. In coordination with the North American Electric Reliability Corporation, we have established and enforced mandatory cybersecurity standards aimed at enhancing the Bulk-Power System’s ability to prevent and recover from successful cyber intrusions. Yet, while we have had bulk electric system reliability standards for over a decade, there is no corresponding reliability regime for pipelines – whether they transport natural gas or liquid fuels. Instead, the Transportation Security Administration has responsibility for the security for the nation’s 2.5 million miles of pipelines but has published only voluntary guidance.
In 2018, Commissioner Chatterjee and I wrote an op-ed calling for responsibility over pipeline security to be moved to the Department of Energy and for the establishment of mandatory security standards. And I have held fast on that position. Just last week, Commissioner Clements and I renewed the call for mandatory pipeline standards. I believe the time has come for action. We need mandatory pipeline security standards similar to those applicable to the electricity sector. This is a matter that not only impacts the reliability of our fuel systems but, given the interdependency of our gas and electric systems, cyber-attacks on gas pipelines could impact electric grid reliability.
I also want to comment on a few of the orders the Commission will be considering today. I’ll start with E-7, where the Commission is issuing a show cause order seeking GreenHat’s response to staff’s allegations that the Company and its three owners engaged in fraudulent activity associated with PJM Interconnection Inc.’s (PJM) financial transmission rights market in a manner that unjustly enriched GreenHat and cost PJM’s members approximately $179 million. GreenHat, two of the three owners, and the estate of the third will have 30 days to respond. Today’s order offers another reminder that the Commission has a solemn responsibility to investigate and penalize participants that engage in market manipulation. This is going to continue to be an important priority of mine.
In E-1, the Commission today is setting the return on equity for Entergy’s unit power sales agreement. The order employs the same methodology the Commission used when establishing the return on equity (ROE) for Midcontinent Independent System Operator, Inc.’s (MISO) transmission owners. When we issued Opinion Numbers 569-A and 569-B, I expressed concern about the Commission’s decision to add the risk premium model because the first MISO ROE order had thoroughly explained why the risk premium is not an appropriate tool for assessing a just and reasonable ROE. I continue to have my concerns, but I also believe we cannot keep on changing our ROE methodology. Companies need to have some level of regulatory certainty if they are going to continue to make multi-million and multi-billion dollar investment decisions.
Turning to the natural gas pipeline portion of the agenda, I am going to defer my comments on C-2 and C-3, which will be considered after the consent items are voted on. I also want to briefly address C-4. The order grants Transco’s request to extend by 24 months the deadline to complete construction of the Northeast Supply Enhancement Project. I support this order because it is consistent with the Commission’s precedent to extend the construction deadline when the delay is due to factors beyond the control of the project developer. But I want to make it clear that today’s order does not change the state of play. If New York and New Jersey, do not change their minds and grant the project Section 401 water quality certificates, the Commission cannot permit the Northeast Supply Enhancement Project to proceed.
Finally, I want to comment on an order the Commission issued last night, May 19, 2021, in Docket No. CP16-9-014. That order dismissed a request for rehearing of the Commission’s February 18, 2021 briefing order seeking additional briefing on the issues raised by parties challenging a staff order authorizing Algonquin to place a compressor station in Weymouth Massachusetts in service. The May 19, 2021 order properly concludes that the Natural Gas Act does not permit rehearing of a procedural fact-finding order. Any disinterested observer will tell you that.
But I want to comment on the hysteria with which our February briefing order has been greeted. Much of that has been spurred on by one of my colleagues on the Commission who has been traveling around the country doing his best Paul Revere imitation, except that in this case the British are not actually coming.
As former New York Senator Daniel Patrick Moynihan used to say: “Everyone is entitled to his own opinion but not his own facts.” So let’s actually look at the facts:
On January 27, 2017, the Commission issued an order granting the Atlantic Bridge project, which includes the Weymouth compressor station, a certificate of public convenience and necessity.
On December 13, 2017, the Commission issued an order rejecting requests for rehearing of the decision to grant the project the certificate.
On March 27, 2017, Commission staff issued its first order permitting the project developers to commence construction of the project.
Then, on September 24, 2020, after construction was completed, Commission staff issued an order authorizing the developers to place the project in service. Prior to the staff order, a group of concerned citizens and local governments asked Commission staff to refrain from permitting the Weymouth compressor station to begin operations pending an investigation of a blowdown—that occurred at the facility—but the request was not considered.
Following the September 24 staff order, a second blowdown occurred at the Weymouth compressor station. Thereafter, a group of concerned citizens and the city of Quincy, Massachusetts filed for rehearing of the September 24 staff order placing the project in service. The rehearing request focused on the requesters’ concerns that the blowdowns suggest that the Weymouth compressor station may pose a significant threat to the health and safety of nearby residents. Incidentally, a third blowdown has since occurred at the site further fraying the nerves of the local citizens.
I thought it was prudent in light of the blowdowns and the concerns that have been raised for the Commission to gather more information. Two of my colleagues—Commissioners Chatterjee and Clements agreed. And so, this past February, the Commission issued an order requesting additional briefing on the subject. We received a number of comments and are currently in the process of reviewing them. But I think it is important for everyone to understand that while the Commission asked for additional briefing, we specifically said the compressor station could keep operating, which it has except around the time that the third blowdown occurred.
Some have suggested that the February briefing order somehow opens up the certificate for the Atlantic Bridge project, which includes the Weymouth compressor station. That is simply false. I will say this again: the Commission has no authority to reconsider an order granting a certificate after the order is issued and rehearing of the order is denied, at least absent a remand from the Courts.
But it is important to note that the Commission does not turn into a pumpkin after the certificate is issued. We still must grant the pipeline developer authority to commence construction and, subsequent to that, provide authorization for the project to commence operations. After these three orders are issued—and the rehearing processes associated with each order is complete—the Commission no longer has jurisdiction over the project, except to ensure that ongoing conditions contained in the certificate are satisfied—for example, restoration efforts on landowners’ property along the pipeline route. At that point, the Pipeline and Hazardous Materials Safety Administration becomes the government agency responsible for ensuring the project does not present a threat to the public safety.
But that is not yet the situation in which we find ourselves today. The decision to authorization the project to commence operations remains pending before us as part of a rehearing request. The Commission has an obligation to ensure that the staff order allowing the project to be placed in service is consistent with the public interest and that includes making a determination that the three blowdowns that have occurred at the Weymouth compressor station do not imply an ongoing threat to the health and safety of the local community. That is just common sense. If we were presented with information, after a project receives a certificate, but before it is placed in service, that the project is located on top of an active fault line, should we just ignore that fact and just tell the project developer to place the project in service – no questions asked? Of course not!
All this Commission did in the February briefing order was say: before we decide whether to uphold the staff decision allowing the project to be placed in service, let’s ask for additional comments on the health and safety issues presented by the blowdowns to make sure we are not acting inconsistently with the public interest.
Commissioner Danly, in his dissent to last night’s order, argues that the February briefing order places a burden on the project developer because its lawyers will have to draft another document. He also suggests that the February briefing order has created a high level of anxiety among natural gas pipeline developers, which may impact their decisions whether to invest in future projects.
While I appreciate that project developers would prefer to answer as few questions as possible, we have certain obligations to affected local communities and the health and safety of their citizens. And even if, as Commissioner Danly’s dissent suggests, a number of pipeline companies are concerned about our February briefing order, that pales in comparison to the anxiety experienced by people that live near the Weymouth compressor station. We are talking about an area that includes two environmental justice communities and where local residents already have a higher incidence of cancer, asthma, heart disease, and other maladies. So when people in the community hear that the project has recently suffered three blowdowns that released methane and other pollutants into the air that they breathe – how do you think they feel? What was their level of concern? Why do we not care about those citizens and their fears?
At the very least, common decency suggests that our decision to seek additional briefing was the right one. As I mentioned, we are reviewing the comments now and I hope we will be able to make a final determination on the rehearing request filed in the aftermath of the September 24, 2020 staff order soon.
I will now turn to my colleagues for their opening statements and we will begin with Commissioner Chatterjee.