The US government should end its war on natural gas

The Federal Energy Regulatory Commission (FERC) isn’t a household name. But this relatively unknown government agency exerts tremendous influence on the cost of energy and the overall direction of America’s energy policy. Though nominally an independent and unbiased administrative entity, FERC, like the Environmental Protection Agency (EPA), has become highly susceptible to outside political pressures. 

When FERC was established in 1977 as a replacement for the Federal Power Commission, its mandate was to determine whether wholesale electricity prices were unjust and unreasonable and, if so, to regulate pricing and order refunds for overcharges to ratepayers. Today, FERC has three major areas of responsibility: the licensing and regulation of hydropower projects; the approval and regulation of interstate oil and gas pipelines (pipeline safety issues are the domain of the U.S. Department of Transportation); and ensuring the reliability of the nation’s electric power grids. In practice, FERC’s pipeline and grid reliability responsibilities have become closely intertwined. 

According to FERC’s latest strategic plan, the agency’s primary mission is to “ensure economically efficient, safe, reliable and secure energy for consumers through appropriate regulatory and market means.” But in recent months, FERC decisions have wavered from this mission by incorporating health and environmental impacts into the rulemaking process. The result has been favoritism for renewables over natural gas, ignoring cost and reliability concerns.  Here are a few examples:

Last December, FERC and Connecticut Gov. Ned Lamont’s administration, bowing to pressure from environmentalists, canceled a proposed 650-megawatt natural gas plant. If built, the plant would have significantly increased the availability of base-load power in New England, thereby enhancing grid reliability in a region facing serious fuel supply issues. This is a clear example of FERC prioritizing environmental goals — not explicitly mentioned in its mission statement — over its explicit grid integrity responsibilities.

In early January, FERC canceled a contract with an engineering firm that had been engaged to conduct an independent environmental assessment of a $143 million natural gas pipeline in Virginia, thereby delaying construction of a project that would have included compressor upgrades to reduce greenhouse gas emissions. And FERC Chairman Richard Glick recently cited environmental justice and public health concerns about a large natural gas compressor station in Massachusetts, which the agency has decided to allow to continue operating after reconsidering its authorization. 

These and other actions by FERC likely will increase the cost of energy for Americans and do nothing to improve power grid reliability and resiliency. Indeed, they fly in the face of the Biden administration’s ambitious decarbonization goals and proposed upgrades to the nation’s power grids. 

Because of the intermittency of wind and solar power, and the demise of coal-fired generation, we will need base-load gas and nuclear plants well into the future. Unlike renewables, these facilities operate 24/7 and are critical for ensuring reliable power grids. IHS Markit, a research and consulting firm, has warned that the loss of diversity in power supplies, mainly because of the shutdown of coal plants and the lack of new investment in large gas and nuclear plants, may lead to high power costs for households and businesses and impair the resilience of the nation’s power grids. Another study by the Department of Energy concluded that grid reliability may be at risk in the future unless state regulators devise methods to compensate base-load generators for their resiliency attributes.

It’s time for FERC to stop “shaming” natural gas. The switch from coal to natural gas in power generation helps explain why greenhouse gas emissions are 13 percent lower today than in 2005, with an economy that’s 40 percent larger. Even critics of fossil fuels acknowledge that gas has a much smaller carbon footprint than coal but object to its use because of methane releases. But here again, according to the EPA, methane emissions have dropped by a quarter over the past decade, even as natural gas production has nearly doubled.

FERC should return to its original mission by remaining fuel neutral in its rulemaking, thereby allowing competitive market forces to expand the adoption of wind, solar and other forms of renewable energy.

Bernard L. Weinstein is emeritus professor of applied economics at the University of North Texas, former associate director of the Maguire Energy Institute at Southern Methodist University, and a fellow of Goodenough College, London.