By Rich Heidorn Jr.

WASHINGTON — No industry has been more affected by Typhoon Trump in the last year than energy.

In less than 12 months in office, President Trump has abrogated the Paris Agreement on climate change and sought to disembowel the Obama administration’s Clean Power Plan. His Interior Department ended the Obama-era ban on coal mining on federal lands and is removing 2 million acres of national monuments from federal protection.

Trump and congressional Republicans also have taken steps to expand oil and gas development in the Arctic National Wildlife Refuge and off the Atlantic Coast. FERC, restored to full strength for the first time in two years, is under Republican control and facing a Jan. 10 deadline for responding to Energy Secretary Rick Perry’s demand for price supports for coal and nuclear generators.

Yet there’s also evidence that the energy economy has ballast that can withstand even this political wind storm. The economics of cheap shale gas and subsidized solar and wind continue to win market share. Dozens of cities and states responded to Trump’s Paris snub by pledging to meet the U.S. emissions targets. Despite Trump’s claim last week to have “saved” the coal industry, employment has risen by only 1,200 (2.4%) since January and remains near historic lows; although domestic coal production was up 8% in 2017 over 2016, the Energy Information Administration expects a decline in 2018.

While California’s wildfires and the hurricanes that brought biblical rain and ruinous winds have some fearing it’s already too late to prevent severe damage from global warming, RTO Insider will continue covering the nitty gritty of energy policy in 2018 — Armageddon be damned.

Here’s some of the top national stories we’ll be chronicling in the coming year.

FERC’s New Makeup

FERC limped through half of 2017 without a quorum. For all of July, after the departure of Colette Honorable, Cheryl LaFleur was the only commissioner on the 11th floor of FERC headquarters.

New Chairman Kevin McIntyre, a Republican, joined FERC after 22 years at Jones Day. Although he was coleader of the law firm’s global energy practice, he acknowledged in a FERC podcast that he has kept a low profile during his career. “I think that flying below the radar … has been a function of what my role has been in private practice where, typically, I and my law firm colleagues were retained not to land our client in the headlines, but in most instances just to serve as a forceful advocate.” (His former Jones Day colleague Don McGahn is Trump’s White House counsel.)

In his first open meeting Dec. 21, McIntyre surprised FERC watchers by announcing the commission would review its 1999 policy statement on natural gas pipeline licensing — a seeming olive branch to LaFleur, a Democrat, who later gushed, “I was already looking forward to 2018 with all you fine folks, and I now am even more.” (See FERC to Review Gas Pipeline Approval Process.)

It was an encouraging development for those who believe FERC’s nonpartisanship has been a strength. But there’s no assurance that the review, which will likely take months, will materially impact pipelines’ 99.5% success rate in winning FERC approval.

DOE NOPR

An earlier indication of where FERC is headed will come by Jan. 10, when McIntyre has promised the commission will rule on the Department of Energy’s Notice of Proposed Rulemaking.

McIntyre won a 30-day delay on the original deadline, telling Perry he and fellow newcomer Richard Glick needed more time to review the more than 1,500 comments filed in the docket (RM18-1). (See McIntyre Takes FERC Chair; Wins Delay on NOPR.)

Perry called for compensating coal and nuclear plants in regions with competitive capacity markets that maintain 90 days of fuel on site, saying they were needed for grid resiliency.

McIntyre has given little indication of his preferred response. (See McIntyre to Senate: ‘FERC does not Pick Fuels’.)

Commissioner Neil Chatterjee has lobbied for interim subsidies for coal and nuclear plants to provide them a “lifeline” pending a lengthier FERC review.

Although there has been speculation that LaFleur and Commissioner Robert Powelson want to issue a Notice of Inquiry to RTOs and ISOs, they have not expressed definitive positions publicly.

Changes on PURPA?

The new FERC commissioners also may consider making rule changes to address longstanding complaints about the Public Utility Regulatory Policies Act, the subject of a July 2016 technical conference and numerous congressional hearings. The National Association of Regulatory Utility Commissioners asked FERC on Dec. 18 to change its interpretation of PURPA to “align” the 1978 law “with modern realities.” (See NARUC Calls for PURPA Reforms, Outlines Proposed Changes.)

Chatterjee has said he wants FERC to address gaming of the commission’s “1-mile rule,” while Powelson promised in his confirmation hearing to look at “what’s working with PURPA and what’s not.” But both said major changes could require congressional action. (See Chatterjee Outlines Goals for FERC Tenure and No Fireworks for FERC Nominees at Senate Hearing.)

Other Rulemakings

In his podcast interview, McIntyre declared as priorities the commission’s storage NOPR (RM16-23, AD16-20) and revising its policy for determining just and reasonable returns on equity. He also called for more transparency regarding the timing of FERC’s rulings. “As a practitioner, I know firsthand what it’s like to wonder when on earth the commission is going to make a decision on a given matter,” he said. “And I think we owe it to stakeholders and the public itself to be as transparent as we can possibly be about what to expect.”

The ROE discussion got a new variable with the Republicans’ reduction of the corporate federal income tax from 35% to 21%. Montana regulators voted last week to require its utilities to pass the tax savings through to consumers, and Michigan, South Dakota, Kansas and other states reportedly also have opened dockets on this issue. (See Steve Huntoon’s latest Counterflow column, Brother, Can You Spare 70 Billion Dimes?)

NERC Seeks New CEO, Security Chief

Another issue facing FERC is its oversight of NERC, which the commission in 2006 empowered with responsibility for ensuring the reliability of North America’s electric grid.

In November, the Electric Reliability Organization was rocked by the arrest of CEO Gerry Cauley on domestic abuse charges. Cauley, the face of NERC at congressional hearings and FERC technical conferences for nearly eight years, allegedly attacked his estranged wife in an argument over what his wife said was an affair with a female subordinate. (See Cauley Arrest Tied to Relationship with NERC Subordinate.)

General Counsel Charles Berardesco was named interim CEO while NERC searches for a replacement for Cauley, who resigned effective Nov. 20 after reaching a severance agreement, according to sources. (See Cauley Resigns; NERC Launches Search for Replacement.) A week later, NERC also parted ways with its chief security officer in what sources told RTO Insider was a forced resignation. (See NERC Parts Ways with Chief Security Officer.)

While FERC has generally approved NERC’s reliability standards as proposed, the commission has on occasion overruled the ERO or pushed its own initiatives. On Dec. 21, for example, it ordered NERC to lower the threshold for mandatory reporting of cyber incidents. (See FERC Orders Tightened Cyber Reporting Rules.)

Thus far, however, the commission has not shown an interest in addressing what current and former NERC officials say was an authoritarian corporate culture under Cauley, a West Point graduate. Might FERC take a larger role in overseeing NERC management? Given increasing concerns over the grid’s vulnerability to cyberattacks and terrorism, the stakes could scarcely be higher.

EPA Foe Pruitt Upends Agency

EPA Administrator Scott Pruitt has brought dramatic change to the agency, angering and demoralizing many career staffers.

According to The Washington Post, EPA has, or is attempting, to reverse 19 rules, including a request that oil and gas companies report their methane emissions. EPA’s staffing has dropped to its lowest level since the Reagan administration following the departure of more than 700 employees, many through agency buyouts. Pruitt also has remade the agency’s scientific advisory boards, replacing many academics with representatives from states and regulated industries.

In December, as the Supreme Court was considering whether to hear DTE Energy’s appeal of EPA sanctions for modifying Michigan’s largest coal-fired power plant without getting federal permits for a projected rise in emissions, Pruitt reversed the agency’s stance. He said EPA would no longer bring New Source Review cases against generators in disputes over emission projections, a departure from the agency’s prior use of NSR as a preventative. (See Penalty Review Denied, DTE Faces Friendlier EPA.)

In November, almost 60 former EPA attorneys wrote an open letter criticizing Pruitt’s announcement that the agency would stop negotiating settlements in response to lawsuits by environmental groups. Pruitt has long criticized the “sue and settle” practice, which he said lacks transparency and “circumvent[s] the regulatory process set forth by Congress.”

The attorneys said Pruitt misrepresented the impact of such settlements and that his new policy gives regulated parties “a special and powerful seat at the table with no corresponding role for other members of the public.”

Clean Power Plan

It was a foregone conclusion that Pruitt would seek to undo the Clean Power Plan. As Oklahoma’s attorney general, he led states challenging the rule as an overreach of the Clean Air Act. What wasn’t known was how he planned to reverse the rule. On Dec. 18, EPA issued an Advance Notice of Proposed Rulemaking, saying it would solicit public input for 60 days on how to limit greenhouse gas emissions from existing electric generators. Pruitt had told Congress earlier that the agency would issue a replacement rule, rather than seek to overturn its 2009 endangerment finding on greenhouse gases. (See Pruitt Confirms EPA Working on CPP Replacement.)

Pruitt’s “inside the fence line” replacement is certain to prompt new challenges from environmental groups as being an inadequate response.

Solar Import Duties

The solar industry is holding its breath for Trump’s decision on the U.S. International Trade Commission’s October recommendation for import duties as high as 35% on solar cells and modules. The ITC’s recommendation followed its unanimous ruling in September that increased imports of solar cells and components are harming domestic manufacturers.

A flood of cheap imports has helped create a boom in U.S. solar installations, as total installation costs have fallen almost 70%. The Solar Energy Industries Association says increased prices resulting from the case could threaten the 9,000 U.S. solar companies and their 260,000 employees. (See Federal Trade Panel Recommends Solar PV Quotas.)

Trump is expected to rule by Jan. 26.

Congress in Play in 2018 Elections

It won’t be until 2020 when the presidency — and thus FERC — will be up for grabs. But the 2018 midterm elections could also influence electric policy. Democrats need to win a net 24 seats to take control of the House of Representatives. The GOP’s margin in the Senate dropped to 51-49 with Democrat Doug Jones’ upset victory in the Alabama special election. But 25 of the 33 seats up for re-election next year are held by Democrats or independents. (The seat of resigning Sen. Al Franken (D-Minn.) also will be filled in a special election.)

The website FiveThirtyEight reported last month that generic congressional surveys by both it and CNN show “Republicans in worse shape right now than any other majority party at this point in the midterm cycle since at least the 1938 election.” Democrats lead Republicans by 49.6-37.4% according to FiveThirtyEight and 56-38% per CNN. “No other survey taken in November or December in the year before a midterm has found the majority party in the House down by that much since at least the 1938 cycle,” according to FiveThirtyEight.

Trump, meanwhile, has been losing support fastest in the states that gave him the most support in 2016, FiveThirtyEight also reported. In states where Trump won by at least 10 percentage points, his net approval rating is down an average of 18 points.