Unless the regulatory paradigm fairly balances the interests of both load and generation, the utility industry will be condemned to continued upheaval.
Going Off the Record
Lawyers say what they really think about changing policies.
Lawyers get a bad rap in this country, and in some cases it’s well earned. However, during the month of October I enjoyed the distinct privilege of interviewing nearly a dozen of the industry’s most insightful, informed and hard-working people—all of them law-firm lawyers serving energy companies, regulatory agencies and customer groups. These conversations covered an immense amount of territory, from cyber-security standards to national energy strategy, and in every case these attorneys’ comments were thought-provoking and well-reasoned ( see “ Policy Shift ”). Unfortunately, with nearly 10 hours of interview material at my disposal, I couldn’t possibly publish every thought-provoking and well-reasoned statement—in some cases because my sources made those statements off the record.
As any experienced journalist knows, sometimes what a person says anonymously is more important than what that person will say for attribution. In this case it’s a tough call, because attorneys usually are more than willing to tell me what they really think—and they don’t mind generating a bit of controversy as long as it serves the interests of their clients. However, in a few cases what a lawyer really thinks might not benefit his or her clients, and that’s when off-the-record comments get really interesting.
Such comments show, in no uncertain terms, the industry’s ambivalence about the policy shift that’s happening today. No matter what the government does (or doesn’t do), there will be winners and losers, and sometimes people who think they’re in one group won’t realize until much later that the tables have turned.
Lawyers understand this ambivalence better than most people do. They’re trained to see unintended consequences and on-the-other-hand arguments. The following unattributed quotes from lawyers interviewed for this month’s cover story provide a sample of such arguments—and a hint about how legal battles will ensue in the months and years ahead.
On FERC Policy
• FERC Knows Best? “FERC seems to be focused on expanding its jurisdiction and [extending its enforcement authority] deeper into the grid. On issues like reliability and transmission planning, FERC’s attitude seems to be that if it’s not done by them, it won’t be done right. I’m certainly skeptical that having FERC regulate everything is the way to do it.”
• The Reliability Police : “There’s a basic problem with FERC’s enforcement of NERC reliability standards. These standards have been developed by engineers, but lawyers are enforcing them—and lawyers read standards differently from the way engineers read them. The NERC regime was never intended to be legally enforced, and the standards aren’t clear enough. What it means is that utilities really don’t know what’s expected. But where FERC and NERC are coming from is this: ‘Where there is an outage, we will find violations.’”
• Think Globally, Act Locally : “A national RPS [renewable portfolio standard] and climate change regulation undoubtedly will give FERC more reasons to assert its authority. Maybe that’s necessary, but I’m not sure it’s a good thing.