The Federal Energy Regulatory Commission (“FERC”) has announced plans to hold a two-day technical conference on July 8-9, 2020 regarding the ongoing impacts that the emergency conditions caused by COVID-19 are having on the United States’ energy industry. FERC’s stated objective is to ensure the continued functioning of energy markets, electricity transmission, transportation of natural gas and oil and energy infrastructure reliability.
FERC has taken some actions recognizing the impact of the COVID-19 pandemic on jurisdictional entities. Generally, these actions relaxed administrative burdens, such as extending non-statutory deadlines and waiving certain regulations. Depending on the information gained by the upcoming conference, FERC could take more substantive actions.
The conference will be organized around four panels of energy stakeholders to discuss issues in four broad categories.
System Operations and Planning Challenges. This panel will address how electricity, natural gas, and oil companies are handling operating challenges during the pandemic and how they plan to address potential resurgences of the pandemic. More specific issues include:
- Emergency restoration for seasonal events such as hurricanes or wildfires
- Impacts of deferred maintenance activities and delayed project completion
- Supply chain disruptions
- Cyber security threats and vulnerabilities
Electricity Demand and Transmission Planning. The uncertainty surrounding the impacts of COVID-19 may make it more difficult to accurately forecast demand over the longer-term planning horizon. The issues for this panel include:
- How transmission providers intend to manage increased uncertainty in their resource planning processes
- Whether FERC’s transmission planning regulations provide sufficient flexibility for utilities
- The likely effect of the COVID-19 emergency on the current and future power generation mix
- Whether previous forecasts about changes to the resource mix change as a result of the COVID-19 emergency
Natural Gas and Oil Demand. This panel will explore the impacts of the COVID-19 emergency on natural gas and oil supply, demand, transportation, and infrastructure planning. Specific issues include:
- The impacts on supply and demand patterns and pipeline flows
- How changes in natural gas and oil production would affect pipeline flows utilization rates
- The potential impact on LNG exports from existing and planned terminals and the economic impact in the short-, mid- and long-term
- Whether FERC’s regulations have sufficient flexibility for regulated entities to adapt to unanticipated changes in natural gas and oil demand caused by the COVID-19 emergency
Access to Capital – Credit, Liquidity, and Return on Equity. This panel will address how risk factors created by the COVID-19 emergency, such as decreased demand, lower commodity prices, reduced access to credit and reduced market liquidity, are affecting the ability of electric utilities and natural gas and oil pipelines to access sufficient capital and whether those risks may impact return on equity (ROE). Specific issues include:
- Identifying the most acute risk factors
- How the emergency has affected counterparty risk
- The potential impact of credit downgrades on energy markets
- Whether FERC should act to mitigate cash flow or ROE issues
- How COVID-19 is affecting the ability of the international customers of U.S. LNG terminals to continue honoring their agreements, and how this affects the ability of U.S. LNG companies to continue moving forward with their operations or ability to execute infrastructure projects
The conference will be held electronically and will be led by Commissioners. Additional details regarding the issues to be discussed by the panels and instructions for accessing the conference are in FERC’s conference announcement.