Chairman Neil Chatterjee Statement
October 15, 2020

News Release 


“To start off, I’m pleased to turn everyone’s attention to Item M-1, which carries forward the important conversation we started at the carbon pricing technical conference we recently held.  At that historic conference, we engaged in a thorough and rich discussion about the complex issues that may arise at the intersection of state carbon pricing policies and the organized wholesale markets we oversee.

“But cutting through that complexity, we found some important points of agreement and clarity. 

“We heard agreement that many states are considering carbon pricing as a market-based tool for advancing their emissions goals . . .

“We heard agreement that wholesale market rules incorporating a state-determined carbon price could offer a number of benefits. Those benefits include things like increased efficiency, improvements on price formation, and better support for the types of long-term price signals that our energy future requires.  To me, when it comes to our markets, fuel-neutral carbon pricing stands in stark contrast to other state policy tools, like subsidies, which can amount to hidden costs that degrade market efficiency and skew price signals, ultimately hurting the consumer . . .

“And we heard agreement that our authority under Federal Power Act section 205 can reach RTOs’ proposals for wholesale market rules that incorporate a state-determined carbon price.  Of course, the jurisdictional questions are best answered based on the facts and circumstances presented in individual proceedings, but establishing this point was a critical element to continuing any further conversations about FERC’s role here. 

“My overarching takeaway from this robust conversation was that if states continue to pursue carbon pricing — and I fully expect this to be the case — RTOs and their stakeholders can and should explore the feasibility and benefits of market rules that incorporate the state-determined carbon price.  And when they do, they should have confidence that those proposals will be not be a dead letter on our doorstep . . . confidence that we recognize the benefits that such proposals, if properly designed, could bring to our markets . . . and confidence that we will bring our pragmatic, market-based lens to this conversation. 

“That’s why today we’re issuing Item M-1, on a bipartisan basis. M-1 is a proposed policy statement clarifying that, though jurisdictional questions must be answered on the specific facts at hand, the Commission can have jurisdiction under FPA section 205 to consider RTO/ISO market rules that incorporate a state-determined carbon price.

“Today’s proposal also puts down a marker signaling that this Commission encourages efforts to develop wholesale market rules that incorporate a state-determined carbon price in RTO/ISO markets. And importantly, with today’s policy statement, we’re seeking comment on any considerations the Commission could or should take into account when reviewing RTOs’ proposals under FPA section 205. 

“Now, I want to take a moment to underscore what this proposed policy statement is and is not about . . .

“It’s about our openness to considering RTO proposals to improve the efficiency of organized wholesale markets by incorporating state-determined carbon prices into their rules. Let me be clear on this point. This is not, in any way, shape or form, an effort by FERC to take proactive action to set a carbon price. I may sound like a broken record here but I’ll say it again: the FPA does not give us authority to act as an environmental regulator. We have neither the expertise nor the authority to drive emissions policy in this space. So that is not the objective here today.

“This policy statement is about our reaction to and consideration of proposals filed under FPA section 205 -- this is not about actions instituted pursuant to FPA section 206. These are really important points to understand about what we’re doing today, and we’ve endeavored to make  this clear in the proposed policy statement.

“Finally, as I mentioned earlier, the proposed policy statement is an invitation for broad-based input. Often, the next step following a technical conference is to seek post-conference comments. But procedural next steps can take many forms. This proposed policy statement – which we’ve issued in the technical conference docket – is our way of providing a concrete framework for continuing the discussion we began on September 30th.  So, we ask for comments, and we really mean it. – We hope all stakeholders weigh in and help us continue to chart the best path forward.

“Before I close, I want to thank my colleagues. Both Commissioners Glick and Danly, and their teams, have contributed their time and talents to exploring these issues.

“I always appreciate the legal perspective that my colleague Commissioner Danly brings to the table. 

“And I deeply appreciate Commissioner Glick’s willingness to work with me and my team to find common ground. It enabled this Commission to provide bipartisan leadership and bring clarity to a difficult issue.  That’s so crucial here where a broad set of voices have called on us to do just that.

“So, although there’s more work to be done and discussions to be had, today’s action is no small feat. The topics surrounding mitigating carbon emissions can often become highly politicized and divisive. However, we’ve taken on a really complex issue, looking at it just within our jurisdictional bounds, and we’ve found sensible areas of agreement.

“If these questions were easily answered, we’d have reached a solution already. But I don’t believe we can turn a blind eye or keep kicking the can down the road just because it’s the easy way out. So I’m proud of the landmark action we’re taking today at FERC to issue this first of its kind, bipartisan proposed policy statement on carbon pricing.  

“And of course, as always, the real thanks must go the talented FERC staff, who transform ideas and record evidence into action. My deep thanks to this talented team.”

Contact Information

This page was last updated on October 15, 2020