With Powelson Exit, White House Expected to Nominate DOE’s Bernard McNamee

On the last day of Robert Powelson’s one-year time as a commissioner, those following FERC were discussing his likely replacement, Bernard McNamee, head of office of policy at the Department of Energy (DOE).

The expected move from the White House reflects the Trump administration view that DOE officials who follow the directives of President Donald Trump should be placed at the Commission, and FERC’s independence should be reined in, sources said. “The DOE folks and ideologues are ascendant,” and McNamee might be named chairman before Trump’s first term is over, said one source who asked not to be named.

Others did not agree with that view but said much could be determined in how FERC acts in the pending grid resilience proceeding and whether commissioners embrace any administration plan to financially support coal and nuclear generation units. The vote to deny a proposed rulemaking from DOE Secretary Rick Perry in January was 5-0, but the White House continues to push for supporting coal and nuclear resources, and McNamee is viewed as one of the primary architects of any subsequent efforts yet to come, sources said.

McNamee is not qualified to serve at FERC and if he is nominated by the White House it would be “a clear move to support this hair-brained scheme,” to alter market operations and prop up coal and nuclear resources, said Tyson Slocum, energy program director at Public Citizen.

Because the three Republican appointees of Trump, FERC Chairman Kevin McIntyre, Powelson and Commissioner Neil Chatterjee did not endorse the proposed rule from DOE, “the White House is going to make sure they don’t have buyer’s remorse” with the next nomination and will name someone like McNamee who would support such a plan, Slocum said.

“They’ve settled on him as the guy for FERC,” said another source who asked not to be named. “The White House wants a loyalist and they want someone from DOE,” this person said. The organizational structure at DOE and FERC has a dotted line from DOE to the Commission, which is an independent agency, but senior officials in the administration believe FERC is too independent and that the dotted line should be shortened or eliminated, the source said.

McNamee’s name as a likely replacement for Powelson was first reported by Politico. He has been executive director of DOE’s Office of Policy for a few months, and earlier this year he led the Center for Tenth Amendment Action at the Texas Public Policy Foundation, a think tank with connections to Perry and Sen. Ted Cruz (R-Texas). McNamee was deputy general counsel for energy policy at DOE for 10 months starting in May 2017, according to his LinkedIn profile. He had two different stints at McGuire Woods law firm, served in the Attorney General offices in Texas and Virginia and was senior director policy advisor and counsel for Cruz from the summer of 2013 to November 2014.

In late July, several sources said they did not expect the White House to nominate a replacement for weeks or months, and they still maintain that even if a nomination comes soon, it may be into 2019 before Powelson’s replacement would be confirmed by the Senate. The vote-counting for Supreme Court nominee Brett Kavanaugh could hold up any controversial nominees at other agencies, and McNamee would be challenged by Democrats and pro-market Republicans on the Senate Energy and Natural Resources Committee, sources asserted.

McNamee in July faced tough questions from Sen. Maria Cantwell (D-Wash.), ranking member on the committee, about the Trump administration’s plan to support coal and nuclear generation. Such a plan would make electricity much more expensive and Trump’s plan is crazy and illogical, Cantwell told McNamee.

“You can’t mandate coal and say you’re for market-based solutions. You just can’t,” she said.

McNamee was representing DOE in a Senate hearing on a reorganization proposal for the department.

In earlier interviews with media outlets, Powelson noted that when he was being considered as a nominee for the Commission he interviewed with Gary Cohn and Michael Catanzaro, two officials in the Trump White House who have since been replaced.

Powelson has been a staunch defender of competitive energy markets at the wholesale and retail level, including his eight years at the Pennsylvania Public Utility Commission. He was sworn in on 8/10/17 and said in a recent podcast, posted on the FERC website, that his last day at the Commission will be August 10. He is leaving before his term is up to become president and CEO of the National Association of Water Companies.

In the days after Perry releasing the proposed rule for FERC to consider amending the Federal Power Act to support coal and nuclear generation in organized wholesale markets, Powelson famously said he did not come to FERC to blow up the markets. He made somewhat similar comments during the podcast, that independent system operators and competition at the wholesale and retail level have saved consumers money. “For us to retreat at this juncture would be a colossal failure, “he said, adding “I don’t think the commission in any way is going to retreat on that.”

He thanked FERC staff and colleagues for helping him manage the complexity of issues FERC deals with and asserted that FERC should guard against any interference with its mission. “I’ll be dogged in my defense of the FERC and the work that it does in an independent vacuum. That’s so important. That’s what makes us a very effective quasi-judicial agency,” he said during the podcast.

His advice for any successor included being respectful of FERC’s mission and work in a bipartisan fashion because that is what is expected of commissioners. “Don’t come in thinking you’ll have all the answers,” and “surround yourself with competent people,” he said, adding that his state regulatory role helped him at the Commission.

Dating back to the fall of 1990, when Branko Terzic, a former state regulator in Wisconsin, was at the Commission, FERC has had at least one commissioner, and sometimes more, with state regulatory experience. That does not include the period in 2017 after the departure of former commissioner Colette Honorable — who served as president of NARUC and a state regulator from Arkansas — on 6/30/17, when FERC was without a quorum.

Powelson’s exit will leave FERC with two Republicans, McIntyre and Chatterjee, and two Democrats, Cheryl LaFleur and Richard Glick.

Among those addressing the potential for McNamee to come to FERC and push for a coal and nuclear generation “bailout” was Mary Anne Hitt, senior director of Sierra Club’s Beyond Coal campaign. Like Slocum, Hitt said McNamee’s past record makes him unfit to serve at FERC.

“If McNamee is confirmed to FERC, he will abuse that authority to lead the charge to force taxpayers to spend tens of billions of dollars to bail out old, expensive coal and nuclear plants, at the expense of cleaner, cheaper competitors like solar, wind, and grid storage,” Hitt said in a statement. “Trump is hoping to install a crony at FERC who will unfairly tip the scales in favor of propping up those failing industries,” she said.

An attorney at Dorsey & Whitney countered such a view, asserting that even if McNamee is nominated it would not sway the Commission’s stance on a coal and nuclear support plan. “None of the other four FERC commissioners agree that the country’s power grid faces a dire enough emergency to justify a plan to invoke national security to save coal/nuclear plants,” said Rabeha Kamaluddin, partner in the firm’s regulatory affairs group.

If Powelson was a swing vote, then McNamee’s nomination could tip the scale on FERC’s approach to the issue, but the prior vote on Perry’s proposed rule was a unanimous rejection, and with all FERC commissioners expressing to Congress that there is no substantial evidence of a grid emergency, “it is unlikely that the FERC approach will depart from past precedent,” Kamaluddin said.

By Tom Tiernan TTiernan@fosterreport.com


This article appears as published in The Foster Report No. 3211, issued on August 10, 2018

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Copyright © 2018 by Concentric Energy Publications, Inc.  All rights reserved.

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