FERC to Examine COVID-19 Impacts on Energy Industry

The Federal Energy Regulatory Commission on June 5 announced it will convene a technical conference next month to consider the ongoing impacts of the COVID-19 pandemic on various segments on the U.S. energy industry. The agency will analyse the potential longer-term impacts on regulated entities to ensure efficient functioning of energy markets, power transmission, oil and gas transportation, and reliable infrastructure operations, while protecting consumers.

The conference, scheduled for July 8 and 9, will engage multiple panels to consider a wide range of issues including system operations and planning challenges, electricity demand and transmission planning, natural gas and oil demand, and access to capital.

While utilities typically tackle localized emergencies such as loss of equipment or weather events, the agency noted that the pandemic has “presented an unprecedented set of challenges affecting every part of the energy sector.” The discussion will seek to gain insight into how power, natural gas, and oil companies are managing the ensuing operating challenges, as well as plans to address potential resurgences.

With regard to the impacts on transmission planning, FERC notes that the uncertainty may render it more difficult to precisely forecast demand over the longer term. One of the panels will explore the impacts resulting from power demand changes, utility transmission providers’ plan to address the uncertainty, and the need for flexibility in the commission’s transmission planning regulations.

The panel on natural gas and oil demand will examine the impacts on supply, demand, transportation, and infrastructure planning, including proposed projects, pipeline construction, and rate filings. Further, the discussion will consider how production changes would affect pipeline flows and utilization rates, and impacts on liquefied natural gas exports.

The conference will also focus on the impact to financial markets given that adequate access to capital is essential for regulated electric, gas, and oil companies to provide reliable service. The pandemic has introduced new risks including decreased demand, lower commodity prices, limited access to credit and reduced market liquidity. Risks also include higher delinquencies, and insolvent customers or unrecoverable defaults, volatile stock prices, delays, and rate recovery issues. Further, the forum will consider the risks associated with return on equity issues.