Neil Chatterjee | Chairman of the U.S. Federal Energy Regulatory Commission (2017-2021)

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In this episode, we will be speaking with Neil Chatterjee, a former commissioner and chairman of the Federal Energy Regulatory Commission, FERC, Mr. Chatterjee is a policy reformer who broke down market barriers for the entrance of new technologies, particularly for low carbon technology he's been an advocate for harnessing technology to mitigate physical and cyber threats to critical energy infrastructure Mr Chatterjee also has experience working as a principle and government relations for the National Rural Electric Cooperative Association. Began his career as a staff member on the House Committee on Ways and Means hope you enjoy my conversation with Mr Neil Chatterjee.

00:55 Karan Takhar:
Thank you, Mr. Chatterjee, for taking the time to speak with me today for listeners who may be unfamiliar with. The US Electricity system. Could you talk a little bit about how it is structured and what the role of FERC is?

Yeah, absolutely. The US Federal Energy Regulatory Commission is an independent government agency with a 5 member bipartisan board that is responsible principally for the reliability of the grid overly simplistically, what that means is that is the government agency that ensures that when Americans hit the switch, the lights come on. FERC is responsible for overseeing the countries wholesale electric markets, the competitive markets for setting standards to ensure reliability with evaluating applications for energy infrastructure like natural gas pipelines and liquefied natural gas export facilities, evaluating licenses for hydroelectric facilities, setting incentives and ROE for transmission prod projects enforcing the sanctity of markets and making sure to combat market manipulation and give confidence to the markets in many ways for is the principle energy regulatory body in the USA, I joked around with Secretary Perry when he was a DOE ought to be called DOS, the Department of Science, because that's really where DOE focus is and FERC is the premier energy regulatory body he laughed at that, but it plays an important role in our everyday lives here in the US.

Thank you for expanding on that and as burps Commissioner, I've read that you championed several initiatives to boost renewable energy resources for example, approving 2 orders, one which allows distributed energy resources such as rooftop solar and electric vehicles to participate in a wholesale electricity markets and another similar order enabling energy storage to compete in electricity markets a few years back. Can you provide more insight into what these initiatives do and why they are important for renewable energy growth here in the US? 

Yeah, look at those are two orders that I'm particularly proud of and I think we'll go a great deal towards really altering the way that Americans generate, distribute and consume power. Look, I'm a Republican from Kentucky, from cold country, but I'm a big believer in innovation and in our clean energy future and the opera communities of the energy transition, I don't believe in in subsidies or mandates or regulations my strong preference is for market based solutions from carbon mitigation and to drive growth in the clean energy sector and so the existing paradigm basically had barriers to entry for some innovative new technologies like energy storage, like aggregated distributed energy resources what for did in those two pretty substantial rulemakings was remove barriers to entry to enable those resource to be compensated for all of their attributes, for capacity, for energy, for ancillary services and it was a big deal I think we're seeing already FERC 841 lead to the accelerated deployment of battery storage technology and there's a lot of excitement about the potential of energy storage but I'm really, really proud of FERC order 2222, which I think a decade from now we may look back and say it was the most consequential order ever to come out of that Commission.

When it comes to aggregated distributed energy resources, think electric vehicles, rooftop solar, advanced appliances, you know, one individual electric vehicle owner is not going to be able to impact a market, but through the power of technology, you can harness the energy from thousands upon thousands of electric vehicles and aggregate those with the energy from rooftops solar, then you're competing with the power plant down the street, and it's a really revolutionary possibility that could fundamentally alter power generation in the USA and again we're not mandating it we're not forcing, It we're simply removing the barriers to entry to allow these technologies to be compensated and compete and I'm of the mind that if given the opportunity to compete, these resources will thrive.

As someone with deep experience in the US electricity system, how do you feel the US electricity system will evolve? Do you see scenario you just described playing out in massive scale here in the US?

I'm optimistic or in the midst of an energy transition here in the US but look, our grid is the envy of the world, one of the great opportunities that I had during my time at FERC was I got to travel the world and meet with our international allies and they're really paying close attention to US power markets in our grid design, and they want to learn from us. They wanted to learn from the experts at FARC how they could model their own grids to achieve what we have here, which is a reliable grid and affordable grid, a safe grid that is also environmentally. You know, quite successful we are statistically squeezing carbon out of US power markets. We've been making iterative changes to our energy markets for for years and will continue to do so, I am optimistic about the benefits that the clean energy transition will yield. We just have to make sure we do it in a way that we don't take our eye off the critical issue of reliability I am all for decarbonization as I mentioned earlier, I'm a Republican from Kentucky who believes climate change is real that man has a significant impact and that we need to mitigate emissions problem in favor of policies that move us towards that carbon free fututer, but we have to be cognizant that we not sacrifice reliability in our zeal for decarbonization and I am confident that policymakers and grid operators, engineers and economists throughout the US will help lead us to that successful transition.

Thank you for expanding on that. I also read that near the end of your term you were advocating for carbon pricing? Could you talk about what carbon pricing is and why you felt that it was important to incorporate?

Yeah, absolutely. So as I mentioned at the start of this podcast that FERC has the responsibility for overseeing the countries competitive wholesale electric markets and I think those markets have delivered tremendous benefits to Americans they've benefited consumers and the economy they lead to successful environmental outcomes in terms of reducing carbon emissions, and they've been a successful, reliable enterprise but what has been happening is in the absence of kind of federal legislative guidance on carbon mitigation Individual states have been taking steps to promote policies that favor their own generation and look I'm a believer in states rights and I think United States have a responsibility and have the ability to make questions about their own energy future, but when you have a multi state mark that and if State-A is pursuing policies that are inhibiting state-D resources from being dispatched, and State-D doesn't agree with state-A public policy objectives at that point that's not a just and reasonable scenario, and the federal Commission has to intervene and FARC did come in and push back on some of the market distorting subsidies, mandates and regulations that were were disrupting the markets the Commission overseas and were met with pushback from the states that were promoting those policies and some of those states were toying with they think would be detrimental to the US and to consumers. So in trying to find a way to solve this complex scenario. What I recognize is that a transparent price on carbon pricing the externality in question was a more market based approach that was the most elegant solution to this complex situation now there's a lot of complexities around carbon pricing you could have issues around carbon leakage and economic leakage, and I'm under no illusion that it'll be easy to implement such a policy but given the alternatives only individual states subsidizing non-competitive generators for those states interests, I'd much rather have a transparent price on carbon than a market distorting subsidy, and that's why it really puts for that policy during my time at FARC, and I continue to do so since I've left the Commission, one of my prominent roles is with a organization called the Climate Leadership Council, which is a group with a lot of industry support that is similarly pushing for a price on carbon and the dividend returned to consumers.

I see. In addition to a carbon price, are there any other key regulatory measures that you believe need to be addressed here in the US for the continued growth of renewable energy?

Again, I think there is a strong business case to be made for renewable energy today. There's no question that at their onset, the growth in renewables was driven by governmental policy by regulations and subsidies and mandates I no longer believe that to be the case I think renewables are capable of succeeding on their own and competing on their own and I think that as the economic case for renewables improves and continues to improve, I think market forces coupled with consumer demand with everyone from Fortune 50 companies to small businesses and mom-pop shops, the individual households demanding cleaner sources of energy I'm very bullish on the future of clean energy in the absence of governmental intervention I think market forces will continue to drive the growth in renewables, and we don't need government to stepin.

Got it. I read a statistic recently from Bloomberg New Energy Finance that says- building a new solar park is more cost effective than building thermal generating plants in 91% of the world electricity generation regions, so I think the economic case is definitely becoming more appeal going and moving to the last question, which involves US partnership opportunities between countries like the USA and India or other emerging markets in your travels and experiences for chair when you would engage with regulators from these markets were there any particular opportunities that you saw for partnership between the US and these markets as it pertains to helping them integrate renewable energy onto their grid and into their systems more broadly?

Yeah, no doubt about it. One of my real significant engagements was with India and, you know, I'm the son of Indian immigrants and I think it was particularly powerful, particularly for our Indian regulatory counterparts, that they took personal pride in the idea that the son of Indian immigrants would be in a position to help them as a leading US. Government official better enable their energy transition the Modi government has made a big commitment to the deployment of renewables It's a pretty ambitious goal and they're looking to us in our expertise to see how they can achieve it and so I signed a number of MO use with our counterparts at CERC, which is the direct counterpart to FERC in India, but also with India, PNGRB which is there Gas board because India is looking to design their grid in a similar way to what's worked effectively here in the US which is renewables built on a backbone of gas and it was a great engagement had similar conversations with our allies in Japan where you know the Japanese who are sort of resource constrained and are dependent upon imports are looking to partner with the US in terms of market design and figuring out how to maintain reliability and decarbonized but also potentially using clean technology to have an alternative to Russian gas from a geopolitical state endpoint and so there were great conversations there are European allies are very interested in how to deal with things like offshore wind integration and cyber security and so it was really wonderful, the opportunity to engage with allies around the world and form of soft diplomacy, if you will, share the experience and expertise of a Technocratic agency like FERC to to help our allies build better grips that can deliver reliable, affordable electricity and build international alliances in the process.

I so appreciate you taking the time to speak with me and I end on my interviews with this one final question, and I'm especially excited to hear your answer to as someone who has had such a successful career reflecting back on your own experience and kind of knowing how things have turned out up until now, If you were able to go back and give one piece of advice to your younger self after you graduated college or early on in your career, is there any specific advice that comes to mind that you give your younger self?

Wow, that is a that is a great question I think for me I've been lucky in that I had people advised my younger self I was very fortunate to have, you know, some more experienced folks taking interest in me and help me grow in my career, and I've really tried to pay that forward and so it's not so much that I have advice for my younger self, because I really feel like through a combination of hard work and discipline but really a lot of luck and a lot of good fortune to have people looking out for me I've been able to have a wonderful career to date I just want others to follow that same course, so I guess the advice that I would give that was given to me, and so I'm glad my younger self adhered to this device that was given by a mentor of mine, and it seems pretty simple It's been nice to people, you'd be surprised working in the high-level competitive arena you spend a lot of time in close proximity with people, at least pre-pandemic, and what I have found is oftentimes you'll have multiple qualified people in position to advance in their careers and in my estimation, when I think about who I want to spend time with, if I've got two equally qualified people and once a jerk and once a nice person, I'm gonna take the nice person every time because yes then a lot more time with your co-workers than you do with your family, even and it's important to identify and surround yourself with people you want to be around seems like a simple corny thing, but be nice to people, is the advice that I was given and the advice that I give.

Thank you so much, for being nice to me by participating in this interview series and I really appreciate it. Thank you.

Thanks for having me.

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