Ari Peskoe

The New York Public Service Commission (NYPSC) is leading a protest asking federal regulators to reject a proposal that would give incumbent utilities a path to building certain transmission upgrades planned by third-party transmission developers. The state grid operator's right of first refusal (ROFR) proposal, which could give utilities a new income stream, would lead to unfair rate hikes, would fail to balance consumer and shareholder interests, and thwart the Federal Energy Regulatory Commission's efforts to inject competition into the transmission process, the NYPSC said in a Tuesday filing at the commission. ... Competition has generally worked well in New York for public policy transmission projects, according to Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. ... "New York's policies are headed in the same direction, and they all point to a significant influx of clean energy over the next couple of decades," Peskoe said. "[The utilities] are trying to effectively tax clean energy policies by attempting to take a cut of the profits without any competition."

New rules affecting the electric power system issued by the Federal Energy Regulatory Commission should apply everywhere, including in parts of the country that lack organized power markets, FERC Chair Richard Glick said yesterday. ... The Midcontinent Independent System Operator has also urged FERC to apply future transmission planning reforms to both RTOs and non-RTOs, since leaving non-RTOs out of certain requirements could give utilities a reason to leave the organizations, said Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program. "Glick is clearly addressing a broader point, not just about transmission development," Peskoe said. "In general, FERC has to more actively regulate the utilities that are not in RTOs, in part to ensure that utilities not in RTOs will not stay out to avoid FERC rules and those already in RTOs won’t leave in order to avoid FERC rules."

New Jersey is weighing a novel approach to developing electric transmission projects that observers say could soon be explored by other states and help drive renewables. New Jersey’s Board of Public Utilities announced Sept. 24 that it had closed a request for proposals from companies seeking to build transmission infrastructure to connect planned new offshore wind farms to the regional power grid. In a unique arrangement with the grid operator for the mid-Atlantic region, the Garden State has agreed to pay for a new transmission network without help from other states and use the power lines to link up a slew of wind projects expected to be built off the Jersey Shore. ... Voluntary transmission agreements could be particularly useful for states with offshore wind procurement plans, said Ari Peskoe, director of the electricity law initiative at the Harvard Law School Environmental and Energy Law Program. Offshore wind is generally going to be developed in predetermined locations, which would make it easier for one or more states to plan for the transmission lines through a voluntary agreement, Peskoe said. ... “There’s a lot on the table right now about transmission at FERC, and I suppose it’s also possible FERC might include this in a rulemaking further down the line,” Peskoe said. “But I think the current policy statement is really an invitation that states and RTOs explore this option if it makes sense.”

Like many ravaging storms that came before it, Hurricane Idaexposed the fragility of Louisiana’s power grid, knocking out electricity to hundreds of thousands of people and businesses, including nearly all of New Orleans. It also laid bare growing doubts about the ability of the state’s largest energy provider to protect against the effects of climate change, including the increasingly destructive weather it causes. ... Ari Peskoe, the director of the Electricity Law Initiative at Harvard Law School, said Entergy is “an extreme example” among old-school utilities that stand to lose from the building of regional transmission lines. “There is an incentive mismatch between what’s good for the public versus what a utility might want to do, which is to protect its legacy power plants that it can still make money off of,” Peskoe said.

Like many ravaging storms that came before it, Hurricane Ida exposed the fragility of Louisiana’s power grid, knocking out electricity to hundreds of thousands of…

The power grid serving nearly 20% of the U.S. population is about to throw a roadblock in President Joe Biden’s plan to decarbonize the electricity sector. PJM Interconnection LLC, which keeps the lights on for 65 million people from Chicago to Washington, D.C., is expected to clear a fleet of new natural gas plants-- and even extend the lives of some coal plants -- when it releases the results of its massive electricity auction Wednesday. That’s because Trump-era changes to the way the auction is structured give a leg up to fossil fuels, at the expense of zero-carbon sources such as nuclear, wind and solar. “The market has been trending toward renewables, but this is pulling it back,” said Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative. “It’s fighting the future.” As much as 4 to 6 gigawatts of new gas capacity and several clunker coal plants could clear the auction, according to some estimates, while nuclear and renewables are expected to be the big losers. Such an outcome would further entrench fossil fuels in the biggest U.S. power market, and runs counter to the president’s goal of eliminating greenhouse gases from the power industry by 2035.

Private equity firms are proving there’s still plenty of profit in the U.S. coal industry despite a decade of falling demand for the fossil fuel. They are spending billions of dollars buying coal-fired plants on the cheap - and getting paid even when they are not providing power. Since the end of 2014, at least five U.S. private equity firms have bought coal plants in markets where regulators pay them to be on standby to provide emergency power when demand surges with extreme hot or cold weather, according to a Reuters review of U.S. regulatory disclosures and credit-rating agency reports...FERC did not respond to requests for comment, and the White House declined to comment. “I’m confident, in the next couple of years, FERC will order changes,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. Policy changes could make it harder for highly-leveraged private equity owners of coal plants, like Lightstone, to refinance their debts, according to Richard Donner, a credit analyst at Moody’s Investors Service. About $1.7 billion in the company’s debt comes due in 2024. Even so, Lightstone’s creditors are the ones with the greatest risk, according to Peskoe. “Somehow the private equity guys always make out OK,” Peskoe said. “It’s everyone else who doesn’t.”

An article by Ari Peskoe: Interstate transmission development is fragmented by local utility service territories. Parochial interests are impeding large-scale transmission projects, which in turn is slowing wind and solar deployment. The combination of discriminatory state laws and Federal Energy Regulatory Commission transmission planning rules shields utilities from competition within their local service territories and induces them to focus on developing small-scale local projects. These protectionist policies reinforce an anachronistic utility-by-utility approach to transmission planning that is failing to develop theregional transmission necessary to effectively decarbonize the power sector and mitigate the impacts of extreme weather. Consider Minnesota, where sixteen utilities own interstate electric transmission lines. A decade ago, the state legislature set that number in stone by granting these sixteen entities exclusive rights to build additions to their respective portions of the interstate power network. The state recently asked the U.S. Supreme Court not to invalidate that law because allowing a seventeenth entity to own transmission in Minnesota "would inject uncertainty" into the state’s power network and "risk unreliable transmission." These wholly unsupported claims, that belie the experience of transmission operators around the country, are at the heart of the state’s assertion that its exclusionary law has a legitimate basis and is not intended solely to protect local utilities from competitors.

A fundamental flaw in the freewheeling Texas electricity market left millions powerless and freezing in the dark this week during a historic cold snap. The core problem: Power providers can reap rewards by supplying electricity to Texas customers, but they aren’t required to do it and face no penalties for failing to deliver during a lengthy emergency. That led to the fiasco that left millions of people in the nation’s second-most-populous state without power for days. A severe storm paralyzed almost every energy source, from power plants to wind turbines, because their owners hadn’t made the investments needed to produce electricity in subfreezing temperatures...Within the competitive Texas power market, there is a strong incentive for generators to keep costs down to recoup their investments. The rapid buildout of wind and solar power, which are now among the cheapest sources of electricity, have pushed prices even lower in recent years, making it more difficult for gas and coal plants to compete. For plant owners, that presents a paradox: Should they add to their capital costs by preparing for severe cold snaps that occur only occasionally, or skip the preparation and risk tripping offline, missing out on high prices and exacerbating a potential supply shortage? “With everything there is a trade-off,” said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. “More resilience is potentially more expensive, but electricity is an essential service. These are hard decisions.”

President Joe Biden outlined ambitious new plansfor taking on climate change on Wednesday, but the most potent weapon may already be in his arsenal. The five-member Federal Energy Regulatory Commission is poised to play a pivotal role fulfilling Biden’s clean-energy ambitions, including his vow to strip greenhouse gas emissions from the power sector over the next 14 years. FERC could help Biden deliver on those promises by fostering carbon prices on electricity, propelling a massive build-out of high-voltage power lines and making it harder to build natural gas pipelines...Biden can’t count on help from Congress. With Democrats having only a narrow hold on the House and Senate, it’s unlikely both chambers will pass broad clean energy legislation, including a nationwide renewable power mandate. Enter FERC, which can accomplish many of the same goals, said Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative. “FERC will be an indispensable player in the Biden administration’s clean energy agenda,” Peskoe said. “It’s the federal regulator of two major energy industries -- the power sector and the natural gas industry -- so it matters a lot in how this energy transition plays out.”

Welcome back to Transmission Week here at Volts! In my previous post, I explained why the US needs lots of new high-voltage power lines. They will help stitch together America’s balkanized grids, connect remote renewable energy to urban load centers, prepare the country for the coming wave of electrification, and relieve grid congestion. And oh yeah — we won’t be able to decarbonize the country without them... Today, we’re going to walk step by step through the process and show why they’re not getting built. At each stage, we’ll look at what Congress can do — and what Biden can do without Congress’ help — to get the process moving...As Ari Peskoe of the Harvard Electricity Law Initiative writes in a recent paper, “FERC was optimistic that [the IOUs’] central-planning development model would be replaced by ‘well-defined transmission rights and efficient price signals’ that would facilitate market-driven expansion.” When it didn’t quite work out that way, once again, in order 1000, “FERC employed several mechanisms to pry control over regional transmission development from IOUs and break the IOU-by-IOU planning model,” Peskoe writes...IOUs have engaged in a “shift away from regional projects, which must be developed competitively, to smaller or supposedly time-sensitive projects that IOUs build with little oversight and without competitive pressures,” Peskoe writes, and RTOs have implicitly or explicitly supported them in this shift.

The Trump administration did not offer comment to the U.S. Supreme Court about a bid by certain coal-producing states to reject the legitimacy of Washington state standing in the way of a coal export terminal, leaving an opportunity for a Biden administration-controlled U.S. Justice Department to give an opinion instead...The justices have not decided whether they will hear the full case; a decision requires the support of at least four justices. In October 2020, the Supreme Court invited the acting solicitor of the U.S. Justice Department to comment on whether the case should be heard. The Trump administration's DOJ had not filed anything as of Jan. 21, the Supreme Court docket shows... The legal arguments could be dividing conservative justices on the court, making it difficult to proceed to oral arguments, according to Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program. Following the lead of former Associate Justice Antonin Scalia, Associate Justice Clarence Thomas has rarely been willing to recognize the legitimacy of the Dormant Commerce Clause, and newly confirmed Associate Justice Amy Coney Barrett may feel similarly. "Given that [Amy Coney Barrett] is apparently a Scalia acolyte, the other four conservative justices would have to decide to hear this case for it to move forward," Peskoe said in a Jan. 21 email. "I don't see it happening. My guess — and it's just a guess — is that the Trump DOJ didn't think this case was worth the effort, given the very long odds."

The slim edge Democrats won in the Senate renews hopes for limited legislation to combat climate change, such as measures to fulfill President-elect Joe Biden’s pledge to promote the use of electric vehicles and clean energy. But the ambitious Green New Deal, as well as controversial proposals to phase out fossil fuels and ban fracking, are still on ice...Renewable energy advocates said they expect Democrats in charge of the House and the Senate to collaborate with Republicans on a green-themed infrastructure bill that contains encourages sustainable development, including investments in mass transit and charging stations for electric cars. Republicans and Democrats also could find common ground on efforts to support carbon capture and sequestration technology essential to pare emissions from power plants as well as heavy manufacturing. The Democratic takeover of the Senate also could provide an easier path for Biden’s nominees to federal agencies that control energy and climate policy, including the Federal Electricity Regulatory Commission, where three Republicans are set to hold a majority until midyear. “FERC will become a Democrat-majority body and there won’t have to be any horse trading with the Republicans to make that happen,” said Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative. “McConnell was not shy about holding up Obama’s nominees, so there was precedent for sitting on the nominee forever.”

A pair of U.S. Senate wins by Democrats in Georgia means that current Majority Leader Mitch McConnell will no longer have the ability to unilaterally prevent the Federal Energy Regulatory Commission from having a Democrat majority this year. The development means that the federal agency could play a more expansive role in advancing President-elect Joe Biden's energy and climate policy agenda during his first term, especially given that the Democrats' slim control of the U.S. House of Representatives and Senate may thwart the passage of more progressive legislation. The agency currently has a 3-2 Republican majority, but one of the Republican seats will expire in June...While FERC controls its own agenda, it also has to respond to filings made by regulated parties like utilities and other key players such as environmental organizations, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. "So it could be that whatever agenda FERC might have in mind could be, in part, overtaken by whatever is put before it," Peskoe said in an interview. Peskoe noted that this occurred early in the Trump administration when the Energy Department in September 2017 pursued a proposal to prop up ailing coal- and nuclear-fired generators with subsidies, an effort that ultimately failed. "I'd be surprised if the Biden DOE did something like that, but it just illustrates the fact that things can be out of the control of commissioners sometimes," Peskoe said. Parallel examples in a Biden administration could include a carbon pricing proposal from the New York ISO or a complaint filed by clean energy advocates concerning wholesale capacity market rules, Peskoe said.

Industry observers see the Federal Energy Regulatory Commission as a major player in the clean energy transition and believe new leadership that will take the helm at the agency in 2021 could aid with effectuating the climate goals of the president-elect and certain states. Once considered an obscure, sleepy agency, clashes over natural gas infrastructure projects, coal plant retirements and state clean energy policies thrust the agency into the center of climate debates. With authority over power sector operations and planning, its decisions are helping to shape the evolution of the sector and influence the energy transition...Ari Peskoe, director of Harvard Law School's Electricity Law Initiative, said that "regardless of whether Congress passes clean energy legislation, the Democratic-led FERC should choose to wield its authority to support a clean energy agenda." He asserted that FERC had broad discretion to do so given that it operates under flexible legal standards and already has transmission oversight and market regulation authorities. In a paper, he specifically advocated for FERC to ensure that transmission networks support clean energy deployment and that power market rules align with the clean energy transition. As such, Peskoe said FERC would "be an indispensable player in the Biden administration's clean energy agenda" as its decisions would affect the pace and cost of clean energy deployment.

The U.S. energy transition is well underway. Electricity from solar and wind is increasingly competitive with natural gas power, and the grid is hemorrhaging coal plants that no longer make economic sense. But without any real national climate policy managing the decline of fossil fuels, the transition is scattershot, messy, and full of carnage. Power companies announced more than 13 coal plant retirements this year, in many cases moving up previously announced closures and shortening the window of time the communities that live near and work at those plants have to think about what comes next...There’s also no single, swift action the Biden administration could take to require all fossil fuel–burning power plants to shut by 2035. Ari Peskoe, director of Harvard University’s Electricity Law Initiative, told Grist that instead, the government could try to approximate that deadline through environmental and economic regulations. The Environmental Protection Agency (EPA) could regulate greenhouse gas emissions, and states could choose to adopt even stricter rules. Some are already doing so — three coal plants in Colorado may be forced to shut down in 2028, two years earlier than previously planned, to meet the state’s climate targets and an air quality rule that seeks to improve visibility in Rocky Mountain National Park...The other side of the coin is preventing new gas-powered generators from being built. Peskoe said the EPA could put stricter rules on new plants, and he expects to see rule changes in interstate electricity markets that make the economics of building a new plant less favorable. “They can also stop pipeline expansion too, which is obviously related to power plant expansion,” he added.

Electric utilities have a legal obligation to plan for climate change and its impacts under public utility and state tort laws, and could face liability if they fail to do so, according to a new report from the Environmental Defense Fund and the Sabin Center for Climate Change Law at Columbia Law School...The use of tort law, which covers harm related to civil claims, could provide "another legal mechanism for reforming local electricity distribution," according to Ari Peskoe, director of Harvard University's Electricity Law Initiative. But he said "the best approach" remains using the utility regulatory commissions to ensure utilities are prepared for climate change...Ratemaking and planning processes remain the most effective way to reform how utilities do business, according to Peskoe. "Reform advocates can participate in those processes, but ultimately PUCs make the decisions," he said in an email. "Tort law provides another avenue for advocates, although it’s more reactive." Peskoe said claims made under tort law can be "another tool in the toolbox for advocates to pursue reforms." "I suppose the goal of these tort cases would be to make utilities’ past practices so expensive ... that they are essentially compelled to reform their operations or planning in response," Peskoe said.

Thursday’s meeting of the Federal Energy Regulatory Commission started off with expressions of comity between its three commissioners. It ended with another round of dissents from its sole Democrat, who warned of possible legal challenges to FERC decisions approved by its Republican majority over his objections. Questions of political pressure on the avowedly nonpartisan agency have swirled around FERC over the past weeks after the Trump administration demoted Neil Chatterjee from his two-year tenure as FERC chairman to appoint fellow Republican James Danly to the leadership position...Ari Peskoe, director of the Electricity Law Initiative at Harvard University, noted that FERC’s subsequent actions to impose even more problematic restrictions on state-subsidized resources in the capacity market of mid-Atlantic grid operator PJM may strengthen legal challenges to ISO-NE's CASPR construct. “One of the key legal issues in both proceedings is FERC’s authority to address state policies,” he wrote in a Thursday email. “FERC went further in PJM, and perhaps clean energy interests will be able to make more convincing arguments based on those facts.”

Federal Energy Regulatory Commission member Neil Chatterjee defended his actions on clean energy and climate after President Donald Trump on Nov. 5 unexpectedly replaced him as chair of the independent agency. Chatterjee said he also sees an outsized role for FERC, and himself, if former Vice President Joe Biden wins the presidency and Republicans maintain control of the U.S. Senate...FERC issued a news release late Nov. 5 announcing that Chatterjee had been replaced as chair by fellow Commissioner James Danly, who in various dissents and statements has conveyed a narrow view of the quasi-judicial regulator's authority. Chatterjee has promised to stay on through the end of his term at the end of June 2021 or potentially longer if the Senate is unable to confirm a replacement before the next U.S. Congress is sworn in. Chatterjee speculated that the decision to hand Danly the gavel may have been related to a draft policy statement issued by FERC last month outlining the commission's legal authority to approve wholesale power market rules that accommodate state-determined carbon pricing. Danly penned a partial dissent to the policy statement, arguing it was issued prematurely...In the meantime, observers should not expect Danly to initiate proactive rulemakings in the same way FERC did for energy storage and distributed energy resources following the 2016 election, said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School. "Danly has explained that he is not a proactive regulator, so I don't expect him to launch any agenda," Peskoe said in a Nov. 6 email.

The rapid evolution of the power grid will require the attention of one critical agency —  the Federal Energy Regulatory Commission. And observers say no matter what happens Nov. 3, the agency will have no choice but to address the industry's transition, even if it means backing away from some of its more controversial policies. Over the past four years, the commission has been accused of trampling on state efforts to move away from fossil fuels and toward zero-carbon, renewable resources...The Biden Administration has an ambitious plan to bring the grid to zero-carbon electricity by 2035, an ambitious target that exceeds the goals of utilities' mid-century decarbonization plans, already considered aggressive by some in the industry. Getting that type of plan through Congress will be difficult in itself, dependent, in part, on which party secures the majority in the Senate. "FERC's role could really hinge on whether Congress does enact any clean energy legislation, even if that energy legislation doesn't specifically task FERC with anything," said Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School's Environmental and Energy Law Program. For example, if Congress were to pass any sort of clean energy standard, FERC would be beholden to that law, regardless of who was in charge of the commission. FERC's efforts over the past few years have been centered around "leveling the playing field" for energy resources, much of it said by NGOs and others to be aimed at state clean energy policies and subsidies, which Chatterjee and fellow conservative Republican-appointed commissioners have characterized as "distorting" the markets by giving renewable or zero carbon resources an advantage over fossil fuel generators. But under a federal clean energy standard, "everybody is under the same obligation," said Peskoe. "I don't think FERC could ignore that."

The Federal Energy Regulatory Commission does have the legal authority to implement a carbon price, legal experts agreed during a Wednesday technical conference on carbon pricing. Under sections 206 and 205 of the Federal Power Act, FERC has the authority to actualize such a policy through the regional transmission operators (RTO) and independent system operators (ISO), six panelists spanning academia and industry law told commissioners. But a slightly murkier question is whether the commission has the power to implement such a tariff unilaterally — an issue Commissioner James Danly was particularly interested in. If FERC were to establish a record, there is no "inherent jurisdictional bar" to prevent the commission from issuing a carbon price without a direct request from grid operators, Ari Peskoe, director of Harvard's Electricity Law Initiative, said. Others said it was possible, but tricky without a legislative mandate. FERC's highly-anticipated carbon pricing conference raised a number of questions about the technical feasibility of implementing a carbon price. For Danly, FERC's newest commissioner, only one question was relevant: Does FERC have legal authority to do this? ... Danly pressed this point further in his line of questioning. "I'm assuming ... from what I've heard that there's nobody on the panel who believes that FERC has the mandate or authority to simply unilaterally impose the universal carbon pricing system," he said. Peskoe countered that he thought the commission did, in fact, have that authority.