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Ron Binz Will Continue FERC’s Leadership Toward A Clean Energy Future

By Richard Caperton, Guest Contributor  

"Ron Binz Will Continue FERC’s Leadership Toward A Clean Energy Future"

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Ron Binz in 2011. (Credit: Kathleen Lavine / Business Journal)

Last week, President Obama nominated Ron Binz to succeed Jon Wellinghoff as chair of the Federal Energy Regulatory Commission. Binz, a former state regulator from Colorado, has some big shoes to fill, and is more than up to the challenge.

Binz has a history of progressive leadership from his time on Colorado. Notably, he helped orchestrate Xcel Energy’s transition away from coal power and toward much cleaner alternatives, including wind and natural gas. This shift will improve Coloradans’ public health while continuing to serve them with affordable, reliable power.

In his role as FERC chair, though, Binz will have less influence over these types of transactional issues. Instead, he will be a key part of the national energy policy leadership. In this role, he will focus more on national issues like transmission policy and maintaining grid-wide reliability as the country follows Colorado away from coal and towards low-carbon alternatives.

Binz has shown that he is up to this challenge of big-picture thinking. Since leaving the Colorado commission, he has embarked on a study of how regulatory models need to change to meet future challenges. Utility regulation as practiced today is a web of perverse incentives and outmoded goals based on assumptions about energy that are no longer true, which has led to Binz to conclude that, “Utility regulation needs to shift from backward-looking focus on costs to forward-looking emphasis on value and societal outcomes.”

I could not agree more with this sentiment, and look forward to seeing how Binz works to affect these changes as Chair. To be clear, we likely won’t see a FERC Order 3000 that redefines the role of regulators by fiat. FERC doesn’t have that authority. Instead, this shift will be evident in cost allocation decisions, potential shifts in methodologies to calculate returns on equity, and rulings on how distributed generation should be compensated for the value it provides. (Admittedly, these details are excruciatingly dull. We’ll try to keep highlighting why these things matter, just like we’ve done with Order 1000.)

Pro-consumer clean energy advocates should be optimistic about Binz’s tenure. But, I think we make a mistake by putting too much emphasis on the role of regulators, since regulators’ influence over electricity may be declining. Regulators only oversee industries over which they have been given jurisdiction. In this case, electric utility regulators — either state or federal — have jurisdiction over electric utilities. The issue is that many of the businesses that provide new energy technologies (like rooftop solar or battery storage) aren’t electric utilities. So, the regulatory role of consumer protection and ensuring service standards doesn’t happen in the same way when people switch to these new service providers.

Policymakers need to account for the shift out of the regulated energy space and into the unregulated energy space. Most important, policymakers should ensure that the unregulated energy space is defined by robust market competition with transparent data for consumers.

President Obama has made a fantastic choice for FERC chair. But, nominating Ron Binz is not enough. Congress, the President, and state policymakers all need to be thinking about not just the changing role of regulators — a conversation that Binz can lead — but also the changing nature of regulated industries.

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11 Responses to Ron Binz Will Continue FERC’s Leadership Toward A Clean Energy Future

  1. Jeff Huggins says:

    Dear Richard, (Will we??)

    I’m glad that President Obama has made “a fantastic choice” in terms of who he has nominated for FERC chair. (And, by the way, thanks for the helpful article.)

    Now a central and vital question is, Will WE (Democrats and progressives) make a fantastic choice for the next Democratic nominee for president?

    As I’m sure you can appreciate, this is not at all a theoretical or low-priority question, although it sure seems to be an inconvenient one for many people. It’s a question that many people don’t seem to want to consider or even acknowledge, at least as it relates to climate change.

    What is Hillary Clinton’s (clear and credible?) position on climate change? If she were president today, would she approve Keystone XL (it seems so) or deny approval? Would Hillary also have an “all of the above” energy strategy, just like the one we complain about President Obama having? Is there any sign that she wouldn’t? And how about fracking, and “clean coal”? Are we destined for four (and perhaps eight) more years of “the same”, beginning in 2017?

    We should be vetting her and other would-be nominees starting yesterday — that’s my point — but who is, really? Not CAP, as far as I can tell. Not the progressive media. Not 350.org. Not the Sierra Club. Not anybody.

    And yet, if you listen to Nancy Pelosi, she tells us that she’s excited and that the Democratic party is already “coalescing” behind Hillary for 2016, if I remember correctly what words she used.

    So then, who (what leaders; what organizations; what media) is going to start finding out Hillary’s stances in clear and concrete (and believable) terms regarding climate change? And when? Will we bother to find out and test her positions before we “coalesce” behind her, or is it too late already? Even better, will the climate and environmental movements try to enlist one or more other potentially excellent candidates who are serious about climate change, to at least make sure that climate change is an issue in the primary process and is a chief factor in who we nominate? Will/can you help lead the charge on vetting Hillary? If not, why not?

    So, President Obama has made a fantastic nomination recently. Good for him. But will we??

    Thanks and Be Well,

    Jeff

    • Superman1 says:

      Jeff, What are your evaluation criteria for assessing the quality of a Presidential candidate vis-à-vis climate change? What should their overall climate-related policy be specifically?

      • Jeff Huggins says:

        Briefly, someone who is highly intelligent, (but more importantly) has high integrity, and will Lead and make the tough decisions necessary. Someone who will place the priority of addressing climate change above his or her own aspirations for being elected the next time around. Someone who realizes that a President should help inform and educate a public, not merely follow the public from behind, not merely follow the polls. Someone who will deeply understand what the scientists are saying and the gravity of the situation, and the need for big bold leadership. Someone who will match his/her actions to his/her moral rhetoric.

        Aside from that, the discussion of what sorts of things, actions, and policies I’d like to see is an entirely different discussion, and I don’t claim to have all the answers. But there are plenty of super-smart folks who have plenty of great and workable ideas — they aren’t the limiting factor — the limiting factor (presently) is the will to lead.

        That said, now a question for you: Do you agree that we should start vetting would-be Democratic nominees for president and take that process very seriously, starting now? If so, will you help spread the word and urge that to happen? These are concrete questions, yes? I think the matter is clear enough and am hoping for more folks to join in the message, not more endless debate.

        Thanks for the question, Cheers,

        Jeff

      • Jeff Huggins says:

        Superman1 (and cc Richard), on second thought, I’ll add just one element of my answer to your question regarding policy, because it’s relevant here to my point. Some sort of suitably-substantial price on carbon. That is, we should only nominate and support someone who is serious and credible and committed regarding getting some sort of price on carbon in a way that will be effective. Someone who will be forthright about that, and clear, and start talking about it now; someone who will not shy away from that need. Someone who will Lead, and be Clear! Someone who can make the sale to the public and who will proactively try to make the sale to the public!

        One of the reasons that I mention this is that it’s relevant to my question (above) to Richard Caperton. If I understand it correctly, part of Richard’s expertise and role at CAP has to do with the economics of energy and energy policy. So, obviously, it would be centrally relevant to that role — to that aim — to vet Hillary Clinton and other would-be nominees regarding their stance on and commitment to the best-possible policy means of putting a price on carbon. If we nominate someone who won’t lead us, effectively, to get a price on carbon, Richard and CAP can do all the work they want on such a policy, and on the need for a price on carbon, and it’ll never come to pass. Fruitless. So, it seems to me, it would behoove Richard and CAP and CP and all of us, to find out where Hillary stands, in clear and concrete terms, well before too many people start considering her as the automatic front-runner and sure-fire nominee. Don’t ya think? Hence, I repeat my question to Richard: Will you and CAP begin now to vet Hillary and other would-be nominees? Thanks! Jeff

  2. Superman1 says:

    I have stated previously I don’t place much stock in promises from politicians, especially three years out from an election. Build a sufficient grass-roots, and the politicians will follow. Without the grass-roots, if they follow anyone, it will be the large campaign donors.

    • Jeff Huggins says:

      Superman1, you don’t seem to be understanding me at all. My point is not that a “grass-roots” isn’t necessary. Quite the opposite. My point is more like this: As part of a grassroots effort, and (all of this is related) thus 350.org, CAP, the Sierra Club, and etc. etc., and you and me, and progressives, and so forth, that grassroots effort — and its leaders — should be demanding to understand the positions, in clear and concrete terms, of would-be Democratic nominees for president, including and especially Hillary Clinton (because she is already running and too many people are already Crowning her). It’s not an either/or thing: either we have a grassroots effort, or we try to make darn sure that the next president is a true and committed leader when it comes to climate change. It’s both, of course! In fact, the second aim is one of the key things that the first thing should aim to do. Grassroots begins with people — for example, you and me — so when I ask clearly whether you agree that we should vet would-be nominees before we nominate them, and you say ‘no’ (because you think the need is for a grassroots movement), you are missing the point. Indeed, to move a grassroots movement forward, your response should be ‘yes’, unless you think that it’s entirely fruitless and hopeless to press politicians for their views because you can’t trust them no matter what. (Then, let’s find someone we CAN trust!) In any case, I hope this clarifies what I’m trying to get going: LET’s BEGIN SERIOUSLY VETTING WOULD-BE DEMOCRATIC NOMINEES NOW, before it’s too late! My point is that CAP and CP, and 350.org, and the Sierra Club, and you and me and all of us should start doing that ASAP. (Sorry for the all-caps, but I want to make the point crystal clear and crisp.) Thanks and Be Well, Jeff

  3. Jeff Huggins says:

    Real and Serious Questions: Can We Get a Response?

    Referring to my Comment 1 (above), these are real and serious questions.

    To put it one way, what is CAP doing, what can it do, and what will it do, to help make sure that Democrats and progressives vet would-be Democratic leaders (in particular, would-be nominees for president) regarding climate change to make darn sure that the next person we nominate and elect is the best person, and up to the task, to lead us from 2017 to 2021 to address climate change?

    This is a concrete and timely question, and a very real one, and I’m posting it here in order to encourage and (in a positive sense) prompt a response that, who knows, might even be helpful.

    In particular, the folks in CAP having to do with climate change and energy and energy policy ought to be considering this question front-and-center, today. Nancy Pelosi (and others) have already given their opinion that Democrats are already “coalescing behind” Hillary Clinton. Well then, if that’s the case, it is certainly not “too soon” to earnestly begin the process of finding out whether she’s the best one to lead the charge on climate change (???!!).

    Do you — Richard, Joe, Ryan, etc. — have any thoughts on this?

    Thanks,

    Jeff

    • Joe Romm says:

      My thought is that if she runs, which I expect, she will almost certainly win the Democratic nomination and given the GOP’s self-inflected death spiral at a national level, have a very good chance of winning barring some unexpected event, which could always happen in politics.

      So rather than asking me for anyone else to find out whether she’s the best one to lead the charge on climate change — how about you all creating the conditions that ensure whoever is president does so.

  4. Well worth reading is Ron Binz et al’s 2012 report, PRACTICING RISK-AWARE ELECTRICITY REGULATION: What Every State Regulator Needs to Know [ http://www.raponline.org/event/risk-aware-regulation-ceres-webinar-highlights-strategies-for-effective-regulatory ]. As they note, their use of ‘risk’ also encompasses ‘uncertainty’ – which are very different, as Nassim Nicholas Taleb goes to great pains to explain in his new book Anti-Fragile [ http://www.fooledbyrandomness.com/ ]. Risk is quantifiable. Whether or not it has been properly measured, it refers to something that is measurable. Uncertainty is not quantifiable. Risk can be “bought down” or hedged in ways that uncertainty cannot. A standard example of risk is the sort of game you find at a casino, like roulette, where the odds are clearly known. The state of affairs that will result from a war (the outcome or outcomes), on the other hand, is uncertain, relying on too many variables, complex interactions, and unknown unknowns to be meaningfully quantified. The outcomes of risks have known probability distributions. Not so with uncertainties. So limiting planning to risk can result in “black swans” like Fukushima [operating with assumptions about the underlying probability distribution of events that were unwarranted, meaning that all they had managed to do was conceal significant uncertainties (unquantifiable indeterminacies) that ultimately came back to bite them.] Taking uncertainty into planning consideration means avoiding those options with black swan characteristics (i.e., nuclear power, GHG emitting fossil fuels) and preferring options with (currently) no identified black swan characteristics (i.e., end-use efficiency, wind and solar power).

  5. Jeff Huggins says:

    Joe,

    Your reasoning then seems to be a lot like this, in a nutshell: Because you ALREADY expect that it’s very likely that she will run and get the nomination and win the election, we should not bother much with trying to assess whether she is the right and best person, with respect to climate change, and should not bother much to try to enlist other potentially excellent nominees who might be (and who would at least ensure that there is discussion and debate about climate change during the primary process), but instead, we should just try to do the things that would “make me do it”, ‘me’ being whoever is president at any given time. Your position seems to be that (even at a time when we could, and I would say should, try our best to nominate and elect a leader who would actually lead — so we don’t make the same mistake twice, and find ourselves in the same position four years from now as we are in today) we should graciously accept what fate seems to be dishing up (if we let it) and be content to put a leader in office who might not really be a leader at all, especially with respect to climate change?

    Is that your position? Based on your comment in response to my comments, it seems so. But is it really?

    Joe, if that’s your position (and I’m saying IF), that is an example of how faulty logic at one very-deep level, on a crucial issue, can very substantially undermine our ability to make progress with all of our other ideas and initiative, especially once that time comes, from 2017 to 2021 when we find ourselves with a non-leader who is not willing or up to the task.

    (Note also that I’m not asserting here, at least not yet, that she’s not the right person. I’m simply saying that we should do whatever we can to find out, and to enlist excellent competition before and in the primaries, and to thereby force climate change to be a central topic, and to position ourselves to pick the best person, and so forth.)

    I’m astonished. I half-expected you folks to say that it’s too early to start worrying about would-be nominees for 2016, but here you are giving the opposite answer: Hillary is likely the one, so we may as well resign ourselves to that idea and continue for the next eight or twelve years as we are today, having to fight with the leader who we ourselves put into a leadership role.

    Care to clarify?

    Thanks, Be Well,

    Jeff