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The New Federal Energy Regulatory Commission Nominee

Obama has nominated Ron Binz to head the Federal Energy Regulatory Commission, pending his approval from Congress. He doesn’t seem to favor natural gas over the long run:

The oil and gas fracking boom increased household disposable income by $1,200 last year as lower energy costs flowed to consumers, according to a new study from IHS Global Insight. So Americans may want to know that President Obama’s nominee to chair the Federal Energy Regulatory Commission (FERC) thinks natural gas is a “dead end.”

That nominee is Ron Binz, and in March 2013 he spoke at an Edison Foundation panel on utilities and green technologies. To fight global warming, he argued, government must adopt a “new regulatory model, because that’s where it’s going to start.”

Mr. Binz said switching to gas might be  ”a good move” for the interim, “but we also need to understand that without CCS, without carbon capture and storage, I think that’s a dead end, a relative dead end—it won’t dead end until 2035 or so. But that’s when we need to do better on carbon than even natural gas will allow us to do under current assumptions.”

So there it is: Natural gas is a dead end not because there will be too little gas but because by 2035 it won’t reduce carbon emissions as much as Mr. Binz wants.

More importantly, Binz seems on board with avoiding the legislative process wherever possible and carrying out the Administration’s goals via executive fiat:

Yet that will seem minor if the next FERC chairman is Ron Binz—the most important and radical Obama nominee you’ve never heard of. An electric regulator in Colorado from 2007 to 2011, Mr. Binz is the latest Presidential nominee who doesn’t understand the difference between making laws and enforcing them.

No, that’s unfair. Mr. Binz doesn’t care about the difference. In a recent interview with the Association for the Demand Response and Smart Grid trade group, reflecting on the lessons of his Colorado job, he nodded at the “judicial role” of regulators. But then he mused about their “legislative role” too: “I saw the commission not simply as an umpire calling balls and strikes, but also as a leader on policy implementation.”

This philosophy is especially troubling for a commission like FERC, which is supposed to be an even-handed arbitrator independent of the executive branch. FERC’s narrow legal obligations include protecting the affordability and reliability of the U.S. power supply and electric grid—goals that are in more than a little tension with Mr. Obama’s anticarbon program. The law is a nuisance when you think you’re saving the planet.

And FERC has significant power:

Mr. Binz would almost certainly commandeer the same extralegal powers at FERC to perpetrate similar abuses, regardless of congressional intent. “Regulation needs to shift from its backward-looking focus on costs, to a forward-looking emphasis on value and desired societal outcomes,” he says. In a 2012 report for the consultant Ceres subtitled “What Every State Regulator Needs to Know,” Mr. Binz added that “Both regulators and utilities need to evolve beyond historical practice,” and he encouraged utility commissioners to expand their mandates to include his subjective conception of the “broad societal benefits” of low- or no-carbon power.

FERC was a sleepy regulator until the Obama Presidency, but it has statutory powers that could be turned into anticarbon weapons, such as the authority to impose fines of up $1 million per day for what it claims are violations. They also include the power to block energy mergers and the construction of terminals, pipelines and transmission.

You can bet that Mr. Binz will be creative and political, and don’t be so sure his only target is coal.

Here is more on the fight against Binz. Here are ten questions posed to him before his nomination hearing.

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