July 19, 2017 at 5:00 am ET
The Federal Energy Regulatory Commission has a manpower problem. FERC regulates interstate transmission of electricity, natural gas and oil; it manages electric reliability and security, and reviews liquefied natural gas terminal applications. The commission has lacked a quorum for four months. FERC needs three commissioners to rule on significant energy infrastructure issues. This does not affect operating facilities or approved projects such as recent pipelines that received presidential approval, but it is affecting planned projects. Without a quorum, new projects cannot be approved.
While it is true that many economic sectors must manage manpower issues, the lack of presidential appointees at regulatory agencies is beginning to affect President Donald Trump’s agenda and the affected industries. Although the president has improved the energy landscape by approving several needed pipeline projects, the remainder of his agenda is in jeopardy. Therefore, the lack of a quorum at FERC must be addressed.
Most of the public is unaware of FERC and its responsibilities and the lack of a quorum has gone largely unnoticed. Much of its responsibility concerns long-term energy projects and short delays normally do not affect most projects. This is not normal times in the U.S. The energy sector is changing rapidly thanks to the “shale revolution.” Delaying planned energy projects have national and international consequences and many energy projects need immediate consideration by FERC.
Major projects are on hold, resulting in delays that are costing states and local communities millions of dollars in revenue and thousands of construction jobs. President Trump has nominated well-qualified individuals to fill the empty seats. It is vitally important for his nominees to be approved by the U. S. Senate for important energy projects to move forward.
FERC’s inability to make major decisions has held up an estimated $50 billion worth of energy projects. In the United States, the commission’s delay in acting on applications for new LNG terminals has had profound effects beyond the jobs and economic growth that construction of previously approved LNG facilities is already catalyzing. When it comes to terminals, a delay in construction hampers natural gas production and jeopardizes deals for LNG deliveries to other countries, especially in Europe. LNG deliveries to Europe have the potential to disrupt Russia’s dominance in the European natural gas markets which may negatively impact Russia’s economy.
The energy industry has learned to cope with a shortage of interstate oil and gas pipelines due to regulatory delays stemming from problems at FERC. Among the major gas pipeline projects that could soon be delayed because of a lack of a quorum at FERC are the Atlantic Coast pipeline, the PennEast, Mountain Valley, Mountaineer Express, and the Columbia Gas WB Express. In addition, nine other pipeline projects — including new compressor stations or upgrades — could be delayed.
Jobs, economic growth, consumer benefits and environmental advantages from increased natural gas use depend on having enough commissioners to grant approval. Anyone who questions the need for prompt regulatory action should recognize that private investment in our nation’s energy infrastructure amounts to more than $1 trillion and would support an estimated 1 million jobs a year through 2035.
Dan Ervin is a finance professor at Salisbury University with 25 years of energy experience.
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