Last week, President Obama named retired utility executive Cheryl LaFleur as the acting chairman of the Federal Energy Regulatory Commission (FERC). It was a move likely aimed at pleasing interests in the natural gas and coal sectors. His previous nominee for chairman, longtime regulator Ronald Binz, had drawn the ire of the coal lobby, as reported on the BERC blog.
FERC, which was once a sleepy government agency tucked away in the Department of Energy, has taken on an increasingly prominent role in energy regulation in recent years. Its mission is incredibly vast: to regulate the transmission and sale of any interstate commerce in electricity, oil, hydropower, and natural gas.
As the energy market has become more heavily tied to investment, FERC has become embroiled in financial markets, and their recent difficulties. For example, in July FERC reached a $410 million settlement with JP Morgan Chase, for allegations of energy market manipulation in California from 2010-2012. Unable to reach a settlement with Barclays, FERC sued the bank for similar allegations.
It was into this environment that President Obama nominated Ron Binz to be head of FERC in September. Binz was an energy regulator from Colorado. His nomination met stiff opposition, both from Republicans and from coal-state Democrats, who were opposed to his previous record of promoting coal-to-gas conversions at power plants while a regulator in Colorado. Unable to secure the needed votes to bring his nominee to the full Senate for a full floor vote, President Obama withdrew Ron Binz from consideration in October.
Obama’s new acting FERC chairman, who will presumably be sent forward as a nominee for the permanent position, is Cheryl LaFleur. Ms. LaFleur has a long record in the energy industry, retiring as executive vice president of National Grid USA, an energy delivery company in the northeast. She has served at FERC in various capacities for the past six years, prior to her promotion. She has a doctorate in law from Harvard.
While there are no questions at to Ms. LaFleur’s credentials or capabilities, her promotion to chief of FERC should give energy-watchers pause. Ron Binz drew the ire of the coal industry precisely because he was championing causes which would reduce the carbon intensity of our energy production. His was the type of leadership that could make FERC the dynamic, forward-thinking agency that it needs to be as our energy landscape becomes ever more complex. But President Obama, unable to tell coal-supporters the hard realities of our low-carbon future, capitulated, and instead put forth a longtime energy industry insider. An insider who is unlikely to make waves and unlikely to make decisions which could harm traditional, fossil-fuel based energy industries.
While the Federal Energy Regulatory Commission may seem like an obscure bureaucratic backwater, policy made there has reverberations across the domestic energy economy. President Obama’s capitulation to the demands of coal-supporters in his nominee for FERC chairman shows exactly how high the stakes are. And the result is unlikely to help us achieve our inevitable low-carbon future in the time demanded by current events.
Cross-posted from the BERC Blog, published online by the Berkeley Energy & Resources Collaborative, a network of UC Berkeley scholars and industry professionals.