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Departing FERC Chairman Rejects "All of the Above" Energy Policy

Written by Travis Fisher and Alex Fitzsimmons

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“If we’re going to take control of our energy future; if we’re going to avoid high gas prices every year, we need an all-of-the-above strategy that develops every source of American energy.” -President Obama, March 1, 2012

Wellinghoff’s Moment of Truth

Every once in a while, our politicians in Washington speak their minds and leak the truth about their intentions. In a recent talk by FERC Chairman Jon Wellinghoff, the truth about his anti-energy agenda leaked like a sieve.

During his keynote address at the National Summit on Integrating Energy Efficiency and Smart Grid in October, Chairman Wellinghoff rejected the Obama administration’s “all of the above” energy strategy in favor of his pet initiative, energy efficiency. Wellinghoff said:

“I’ve been doing energy efficiency for a long, long time; an advocate of energy efficiency. Although I have to say, ‘No, we’re advocates of all the above,” all of the above is one of the most overused terms in energy that, hopefully, we can continue to do away with. We really have to start looking at what are the most cost-effective energy sources, and of course, as most of you know, energy efficiency is the most cost-effective thing and the first thing we should all be doing when we talk about our energy usage.”

There’s a lot to sift through here. First, Wellinghoff directly contradicts President Obama’s pledge to “take control of our energy future” with policies that promote “every source of American energy.” That may not be surprising because, judging by the administration’s poor record when it comes to supporting energy production, President Obama himself does not support an all-of-the-above energy policy.  .

Perhaps more revealing, however, is Wellinghoff’s statement that we should continue to do away with the “all of the above” energy strategy. In that statement, does he admit that advocates like himself in government positions are closing the door on energy sources they don’t like—namely coal, oil, and natural gas? These are the fuels Americans have chosen for 80% of the energy they use.

Chairman Wellinghoff’s casual mention that he advocates for a specific niche in the energy industry flies in the face of his mantra that, under his Chairmanship, FERC has remained “technology neutral.”

Lastly, the problem with Wellinghoff’s advocacy for energy efficiency is that market-driven energy efficiency is so cost-effective, there is no need for FERC or any other government action. Energy efficiency is common sense, and people do it because it makes economic sense, but we doubt that’s what Wellinghoff is talking about. He is talking about forced energy “efficiency” which is not economically efficient at all. Like many advocates of energy efficiency, he would compel it through brute government strength.

The Rise of the Regulator-Advocate?

As we explained about the failed nomination of renewables advocate Ron Binz to replace Chairman Wellinghoff, Binz would likely lead FERC further down the anti-energy path Wellinghoff has been forging since 2009, based upon his public statements and well established positions.

President Obama nominated Binz to head FERC just two days after his aggressive climate speech in late June, in which Obama promised to do all he could to push his climate agenda through regulations in the absence of support in congress for costly new programs. And although FERC is a relatively obscure agency, its impact is significant—the Congressional Research Service conservatively estimated that its economic reach is $435 billion per year. Given FERC’s reach and Binz’s history of overreach, IER published several articles highlighting the problems of promoting a renewables advocate to the head of FERC.

Like Wellinghoff, Ron Binz recently exposed his advocacy roots. In his withdrawal letter to the President, he stressed the importance of favoring “clean” energy and appeared to side with Wellinghoff’s sentiments on doing away with “all of the above.” Binz wrote:

“Our nation’s move toward clean energy resources will be much slower without a strong commitment at the FERC to enhance investment in energy infrastructure and to ensure that clean energy resources have full access to electricity markets.  It is essential that your next and future appointees to the FERC have that commitment.”

President Obama has yet to announce his next nominee to fill out the five-person Commission. However, with Binz’s failed nomination and Wellinghoff’s departure last Sunday, FERC has a fantastic opportunity to return to its independent regulatory role. In the meantime, existing Commissioner Cheryl LaFleur is taking over as acting Chairwoman. Notably absent from her acceptance remarks are any references to specific technologies or outcomes, which makes her point of view a welcome contrast from FERC gavels past.

Conclusion

Wellinghoff’s rejection of the administration’s purported “all of the above” energy strategy highlights the need for pro-consumer and pro-energy groups to pay attention to the off-the-radar regulators like FERC and the people appointed to lead them. In fact, this rare glimpse into the mind of an anti-energy regulator justifies the efforts of free-market groups in defending an objective approach to energy policy against regulator-advocates like Wellinghoff and Binz.

IER

IER Policy Associates Travis Fisher and Alex Fitzsimmons authored this post

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today's global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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