Trump Demoted FERC Chairman Chatterjee After He Expressed Support for Carbon Pricing

“It was totally worth it and I would do it again,” said Chatterjee, who had been a steadfast supporter of fossil fuels.

Nov 6, 2020
Neil Chatterjee was demoted as chairman of the Federal Energy Regulatory Commission on Thursday. Credit: Riccardo Savi/Getty Images for Concordia Summit

Neil Chatterjee was demoted as chairman of the Federal Energy Regulatory Commission on Thursday. Credit: Riccardo Savi/Getty Images for Concordia Summit

Neil Chatterjee abruptly lost his job as chairman of the Federal Energy Regulatory Commission on Thursday when, after two years of being a steadfast supporter of fossil fuel industries, he took a few steps that were more climate friendly.

The Trump administration demoted Chatterjee and elevated the other Republican commission member, James Danly, to become chairman.

"I knew that pursuing those policies could potentially lead to a backlash, and my view was, 'It's the right thing to do, and I'm going to go forward with it,'" Chatterjee said in an interview, referring to actions he took that helped the climate and clean energy. "And if, in fact, the speculation is correct, and that, in fact, is why I was demoted, then I am actually quite proud of that."

He added, "It was totally worth it and I would do it again."

Chatterjee said he had not yet spoken with anyone from the White House or received an explanation for the move.

Chaterjee was appointed to FERC in 2017 and briefly served as interim chairman that year before being named chairman for a second time in 2018. For most of that time, his record was reliably in line with fossil fuel interests, including rulings that undermined the effectiveness of state subsidies for clean energy.

But then Chaterjee supported two recent actions that earned him praise from climate and clean energy advocates:

  • In September, FERC approved Order 2222, which said that regional grid operators must open up their markets to distributed energy sources like rooftop solar and energy storage. The order, which clean energy advocates have called a landmark, makes it easier for groups of solar and storage owners to band together to sell some of their electricity to the grid, creating new sources of income.

  • In October, FERC approved a statement that encouraged states and regional grid operators to explore and consider the benefits of carbon pricing. Chatterjee praised the move at the time, saying, "Carbon pricing has emerged as an important, market-based tool that has wide support from across sectors."

Danly dissented in both votes.

"It sure looks like this demotion was in response to Chatterjee even being willing to entertain carbon pricing," said Daniel Kammen, a professor of public policy at the University of California, Berkeley. "He opened the door to a conversation about the environment and got slapped down."

James Danly. Credit: FERC

James Danly. Credit: FERC

The initial reaction to the leadership change was shock, followed by outrage for some.

U.S. Sen. Sheldon Whitehouse (D-R.I.), said on Twitter that the demotion "exemplifies the thuggish behavior of the fossil fuel industry and the servility to it of Republicans."

Chatterjee, who was previously an energy advisor to Senate Majority Leader Mitch McConnell (R-Ky.), said he doesn't know who in the administration wanted him demoted, although he thinks President Donald Trump likely had no role in the decision.

"There have been people within the president's orbit who have not thought I should be the chairman of FERC for a couple of years," he said.

The White House did not respond to a request for comment.

E&E News reported that one reason for Chatterjee's demotion was that he pushed back against the Trump administration's ban on diversity training.

Chatterjee said there was friction between him and people in the administration about diversity training, but he doesn't think it was a major factor.

Considering Joe Biden's likely win in the presidential election, Danly is looking at a short tenure as chairman. The incoming administration can name its own chairman from among the panel's members, which include one Democrat, Richard Glick. The commission has two open seats whose nominees, a Republican and a Democrat, are awaiting Senate confirmation.

Jeff Dennis, a former FERC staff member who is now general counsel for the trade group Advanced Energy Economy, was one of many close observers of FERC to be surprised by Chatterjee's demotion.

He said the FERC actions that supposedly upset the Trump administration were about things that shouldn't be controversial.

"This is not a far-left climate issue," he said, about expanding markets for clean energy in Order 2222. "This is a technology innovation and market competition issue. To have the White House view that as a bridge too far is surprising to me."

Clean energy advocates' appreciation of Chaterjee is a recent phenomenon after viewing him as an adversary for most of his tenure.

He helped to pass an order in December 2019 that said PJM Interconnection, the nation's largest grid operator, had to change its rules in a way that counteracted the effects of state subsidies, which mainly go to nuclear and renewable energy. The order primarily helps coal and natural gas power plants that don't receive state subsidies.

Glick, who opposed the order, said it was "illegal, illogical and truly bad public policy."

But he praised Chaterjee on Thursday after the demotion.

"Each FERC commissioner is supposed to vote solely based on their best judgment of the facts and the law, independent of party affiliation or political pressure," Glick said in a statement. "Even though we haven't always agreed, I know that Chairman Chatterjee arrived at his views honestly and independently."

The shakeup at FERC comes at a time when the agency could soon become an important part of a Biden administration's climate policy.

"The FERC has opportunities to be a really powerful force for good, both fiscal and regulatory good and sustainability good, and potentially even social justice," Kammen said. "I think the FERC office has been underutilized in the past to enable clean energy commerce and I think now that renewables are so inexpensive that that world is wide open."

The office also can help steer an agenda just by opening cases to examine issues and convene discussions, like Chaterjee did with carbon pricing.

"I am very excited to see what a new FERC agenda will be under President-elect Biden," Kammen said.

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