President Trump named James Danly as chairman of the Federal Energy Regulatory Commission (FERC), a Nov. 5 decision made without announcement or explanation from the White House.
Danly, a FERC commissioner, replaces Neil Chatterjee, who moves aside from the chairman role but remains a commissioner.
Chatterjee and Danly, both Republicans, put out statements praising each other and describing each other as friends, and there has been no indication from FERC proceedings, such as comments at open meetings, that any tension exists between then.
Speculation in the nation’s capital is that Chatterjee annoyed the White House by holding a technical conference Sept. 30 on the subject of carbon pricing and then issuing a statement Oct. 15 encouraging the organized electric power markets to explore ways to accommodate state-mandated carbon pricing.
Carbon pricing could shrink sales of natural gas by encouraging greater efforts to shift electric power production from fossil fuels to renewable energy. Natural gas now accounts for more than 40% of US net power generation and has been growing, displacing coal-fired generation, while wind and solar together amount to as much as 10% in some months.
Chatterjee’s statement in October recognized that regional transmission organizations (RTOs), regulated by FERC, are confronted with the fact that many states want to adopt policies that reduce reliance on fossil fuels.
If states pursue carbon pricing
“My overarching takeaway from this robust conversation was that if states continue to pursue carbon pricing—and I fully expect this to be the case—RTOs and their stakeholders can and should explore the feasibility and benefits of market rules that incorporate the state-determined carbon price,” Chatterjee said.
FERC has authority to accept or reject RTO rules, which means FERC may have to deal with any such rules that accommodate carbon pricing.
“This is not, in any way, shape or form, an effort by FERC to take proactive action to set a carbon price,” Chatterjee said. He repeated his frequent insistence that the Federal Power Act does not give FERC authority to act as an environmental regulator.
Danly disagreed with the idea that the commission should issue a statement encouraging RTOs to explore ways to accommodate states’ carbon pricing policies.
The 1935 Federal Power Act requires FERC to regulate the interstate transmission and sale of electricity at the wholesale level while assuring that electric power prices are “just and reasonable.”