POWER March 2015 - 60

COMMENTARY
FERC's Work on the Clean
Power Plan
Cheryl A. LaFleur
O
ne of the most controversial issues facing the energy world
today is how our electric sector will respond to the U.S.
Environmental Protection Agency's (EPA's) proposed Clean
Power Plan (CPP). If finalized, the CPP would, under Section
111(d) of the Clean Air Act, require states to significantly reduce
carbon dioxide emissions from existing power plants.
The Federal Energy Regulatory Commission (FERC) is not an
environmental regulator, and is not tasked with writing the final
rule-that is clearly the EPA's responsibility. And FERC is not
responsible for developing implementation plans-that is the
states' responsibility. But FERC will have an essential role to play
as the CPP is implemented.
I believe that we as a nation can achieve real environmental
progress, including on climate change, but only if we're willing
to build the infrastructure-both gas and electric-and adapt
the energy markets to make that possible.
That is where FERC comes in. We will have responsibilities
across three areas: infrastructure, markets, and convening and
facilitating discussions about how to balance the core values of
reliability, cost, and the environment.
Infrastructure Development
First, I believe that additions to both gas and electric infrastructure
will be needed to implement the CPP. In the case of
interstate natural gas facilities, FERC is responsible for issuing
permits-which includes performing environmental reviews-
and setting rates.
Building block two of the CPP calls for substantially increasing
the utilization of the natural gas plants that exist all around
the country. I believe the CPP will also lead to construction of
additional gas generation because it may be, in many areas, the
most cost-effective way to meet the overall targets of the plan.
But while new gas infrastructure will be needed, it is facing
unprecedented opposition from local and national groups. Our
nation is going to have to grapple with our acceptance of gas
generation and gas pipelines if we hope to achieve our climate
and environmental goals.
FERC's responsibility under the Natural Gas Act is to consider
and act on pipeline applications, ensuring that needed pipelines
can be built safely and with limited environmental impact. Our
work on gas infrastructure permitting is going to be essential
to the successful implementation of the CPP. I am dedicated to
ensuring that the process is fair, clear, timely, and transparent.
FERC is also going to have a role to play in facilitating the
development of electric transmission that will need to be built
to support compliance with the CPP. Building Block 3 of the
CPP points to increasing reliance on location-constrained renewable
generation like wind and utility-scale solar that, because
they are usually built far from population centers, are highly
transmission-dependent.
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Although electric transmission siting decisions are made at
the state level, FERC is responsible for planning and setting rates
for interstate transmission. FERC is working hard to help needed
transmission get built by implementing our landmark Order No.
1000, which requires broad, transparent, and competitive transmission
planning processes that explicitly consider public policy
requirements, like state implementation plans under the CPP.
These processes are intended to result in the most cost-effective
projects, not just for one small area, but for an entire region
and even between regions. We also ensure that needed lines are
built at reasonable cost by balancing the needs of investors and
consumers in approving fair rates and incentives.
Market Adaptation
Second, FERC will have a great deal of work to do to adapt wholesale
electric markets to the CPP. Regional capacity and energy
markets incentivize investment and dispatch power over large
regions based on cost. Both have made some limited adaptations
to support state environmental preferences like renewable
portfolio standards, but not always easily.
However, under the CPP, 49 states will develop individual
implementation plans that will require changes in utilization of
power sources. These plans may not be automatically compatible
with the existing least-cost model. Regional cooperation
will help markets make these adaptations, but that cooperation
itself will require considerable change and compromise.
So FERC, the market operators, and stakeholders will have
to work together to adapt the existing market model to support
the state plans while still delivering the benefits of
competition. FERC will also need to continue to ensure that
markets support investment in resources needed for reliability.
Our fuel assurance order issued earlier this year is one
example of this effort.
Honest Broker
FERC's final job is to serve as an honest broker as work on the
CPP is finalized and implemented. We are beginning this effort
with a series of technical conferences to examine reliability, infrastructure,
and market issues tied to the CPP. Our objective is
to hear from a wide range of entities about how compliance with
the rule might impact them and to begin to prepare for the work
FERC will need to do as compliance moves forward. We must also
continue our engagement with agencies, especially the EPA and
the states, to lend our expertise, share information, and provide
constructive suggestions.
I am honored to be a part of FERC's work, and look forward
to continuing change, challenge, and progress on the nation's
energy and environmental aspirations. ■
-Cheryl LaFleur is chairman of the Federal Energy Regulatory
Commission.
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POWER March 2015

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