By Rich Heidorn Jr. and Michael Brooks

WASHINGTON — FERC Chairman Neil Chatterjee accused Commissioner Richard Glick of seeking to politicize commission staff’s Winter Energy Market Assessment after Glick complained that he had not been allowed to suggest changes to the report before staff’s presentation at Thursday’s open meeting.

“As I understand it, traditionally — and since I’ve been here — when we’ve had these types of reports … [commissioners] had the ability to see the reports in advance and make some suggestions if things weren’t clear … and I’m very disappointed that didn’t occur today,” Glick said. “That is the normal process, and for some reason we were told we had to go back to the original [unedited] report.”

Glick’s concerns were at least in part over the report’s statement that “Coal and oil-fired generation continue to play an important role in maintaining electric reliability during the winter, especially in the Northeast, where winter demand for natural gas can exceed pipelines’ capacity.”

“As I understand it in NYISO, coal makes up about 2% of installed capacity, and it’s even less in New England — it’s like 1%,” Glick said after the staff presentation. “So, what is it about coal and oil that makes it more important for the winter in terms of reliability than nuclear and hydro … or other technologies?”

Oil, which can be used as an alternative fuel for some natural gas generators in New England, made up 1% of ISO-NE’s generation mix and 0.9% of its net energy for load (NEL) in 2018, according to the RTO. Coal had identical shares. Renewables, excluding hydropower, were responsible for 10.4% of capacity and 8.7% of NEL.

In an email to ERO Insider, Glick said his staff suggested changes after the assessment had been reviewed and edited by the chairman’s office. In addition to questioning why the draft highlighted the importance of coal and oil, there were “clarifying” edits intended “to help the public better understand the information in the report,” he said.

Chatterjee acknowledged in a press conference after the meeting that Glick’s suggested edits had been ignored, saying it would be improper for “politically appointed commissioners” to “scrub” staff’s work.

“Perhaps prior iterations of the commission were more politicized and had politically appointed commissioners scrubbing staff’s work. I wanted to be above politics and feel that we should go with the career staff’s work,” he said, prompting laughter among some FERC staff in the room.

Glick’s ‘Biases’

Chatterjee suggested Glick’s questions on the value of coal and oil were “an example of his negative biases toward certain sources of generation.”

Chatterjee also rejected complaints that he has politicized the commission as chair, saying, “I think the compliance actions we took today on Order 841 [opening wholesale markets to storage] are [proof that the allegation] is just patently false.” (See related story, FERC Partially Approves PJM, SPP’s 841 Compliance.)

Glick said he was “offended by the chairman’s characterization during his press conference. I wasn’t the one scrubbing language and the chairman knows that.”

The Democratic Glick has often disagreed with Republicans Chatterjee and Commissioner Bernard McNamee over their refusal to consider greenhouse gas emissions in approvals of natural gas pipelines. But Thursday’s meeting put staff publicly in the middle of their dispute. It was a bit like two warring parents asking their children to take sides.

The report noted that 5.6 GW of natural gas-fired generation capacity will have been added nationwide between last winter and winter 2019/20, prompting Glick to ask staff for the equivalent statistics for wind (12 GW) and solar (6 GW) — which were not in the report.

That led McNamee to press staff to acknowledge that the figures were based on renewables’ nameplate capacity and did not discount them for their lower capacity factors.

It is at least the second time that Glick has criticized the chairman recently over his administration of the commission. In July, Glick and then-Commissioner Cheryl LaFleur complained that Chatterjee had unilaterally ended an investigation into whether Dynegy had acted improperly in MISO’s 2015/16 Planning Resource Auction — a probe that had been authorized by the entire commission. While LaFleur said she concluded that there was no evidence of market manipulation, Glick said Chatterjee “cut short” the probe prematurely. (See FERC Clears MISO 2015/16 Auction Results.)

Report Details

Staff’s winter assessment found that all NERC assessment areas are projected to have reserve margins above their target levels for the winter. The National Oceanic and Atmospheric Administration says there is a high chance that winter will be warmer than average for the Northeast, West, Texas and Florida, with the Upper Midwest expected to have normal temperatures.

It also said natural gas storage levels will be about the five-year average heading into the winter and that gas futures prices are lower than last year with the exception of Boston, where basis futures prices averaged $6.54/MMBtu, up $1.16 from last winter, as of Oct. 4.

In other findings, staff said:

• Production of consumer-grade natural gas set new record highs in the first half of 2019, averaging 90 Bcfd through June, up 12% from 2018. The Marcellus Basin in Pennsylvania, West Virginia, Ohio and New York led production regions with an average of 22 Bcfd through June 2019. The Permian Basin in Texas and New Mexico averaged 9 Bcfd in 2019 through June, a 38% increase from last year. Pipeline additions in both regions allowed additional gas supplies to reach markets.
• The Energy Information Administration forecasts U.S. gas demand will average 100 Bcfd from November to March, up 1% from last winter. Electric generation is expected to increase 6% to 27 Bcfd, which would be an all-time winter high. Industrial natural gas demand is also expected to increase by 2% to 25 Bcfd, while residential demand, generally the biggest driver of winter peaks, is expected to drop 3% to 25 Bcfd.
• More than 3.4 GW of coal-fired generation retired between March and June 2019, with an additional 6.2 GW of coal expected to shutter by February 2020. About 680 MW of nuclear capacity retired between March and June, with an additional 829 MW of retirements announced through February 2020.
• Southern California Gas’ system is expected to face continued restrictions because of pipeline outages and repairs. Some 530 MMcfd of import capacity on Line 235-2 has been offline for the past two years, but repairs completed on Oct. 14 returned 173 MMcfd of import capacity to service.
• Algonquin Gas Transmission and Texas Eastern Transmission have announced capacity reductions to allow pipeline safety and integrity testing in the Northeast, but most restrictions should end by December.
• ISO-NE’s Pay-for-Performance program and PJM’s Capacity Performance program, which use penalties and bonuses to incent performance during capacity critical periods, will be fully implemented for this winter. ISO-NE also is developing market-based fuel security rules, which are expected to be filed in April 2020.

Reserve Margins

Glick noted that all of the assessment areas were projected to have reserve margins well above target levels, with the Northeast Power Coordinating Council forecasting levels of about 70% in New England and New York. Yet winter remains a concern in New England because of its limited pipeline structure, which can lead to gas shortages for generation.

“So are there other metrics we should be thinking about?” he asked. “This is an important issue we should start considering because the way we structure market rules … sometimes causes us to over procure capacity or make decisions that might be good for one part of the year and might not be good for another part of the year. … I would hope the commission and NERC and others can take a look at [that].”