Neil Chatterjee | Former Chairman, Federal Energy Regulatory Commission

Neil Chatterjee: Foreign.

Karan Takhar: Welcome to the Zenergy Podcast. I'm, um, your host, Karn Takar. Today, former chairman of the Federal Energy Regulatory Commission, Neal Chatterjee returns to the podcast. This episode we discuss bridging the political left and the political right in terms of climate and energy and how has it gotten so contentious in the past few years. Neil shares how he believes AI could bring bipartisanship to climate issues, and if he thinks we will be getting permitting reform this congressional cycle. He gives us predictions for where clean energy and natural gas will be in the next 10 years and provides insight into his time at FERC. We wrap up with some advice for those fresh out of college and Those in their 30s who are on the energy track. As always, thank you for listening. Please comment below and let us know what guests you'd like to see on the podcast. Now, please enjoy my conversation with Neal Chatterjee. Hello, Neil. Thank you again so much for, uh, coming back on the Zenergy Podcast is truly privileged to have you on the podcast. I've had the pleasure of, uh, hearing you speak a couple times in the recent months about an array of topics. So much happening in the energy sector here in the US and look forward to diving in on some of the issues that are occurring here. Uh, to kick us off. You've been called a bridge builder in the energy space and would love to get a sense from you on what the hardest bridge is that you've had to build or rebuild between political sides.

Neil Chatterjee: Yeah, well, first off, thank you for having me back. Always, uh, a pleasure to be on with you. Um, yeah, look, I'm pretty proud of, uh, uh, the record of accomplishment I've had in my career, working across partisan lines to get constructive things done for America, um, dating back to my career as a congressional aide. Uh, I was proud to build a bridge between my boss, Senator Mitch McConnell, conservative from Kentucky, and Senator, uh, Barbara Boxer, liberal from California. Got them to come together, uh, uh, on an infrastructure package back in 2015. Was proud of that. During my time at FERC, um, was able to build consensus, uh, to, uh, move FERC order 841, which removed barriers to entry for energy storage resources. Uh, cut a bipartisan deal that enabled us to move forward with exports for liquefied natural gas, and then, um, built consensus around, uh, eliminating a provision that would affect federalized net metering. So, uh, have had a number of successes in building bridges, but the hardest by far, and is frustrating, uh, is on the issue of climate. Climate used to be bipartisan. There was a time when it was kind of a wonky technical issue, uh, that was sort of in the weeds and wasn't particularly political. People forget John McCain was the Republican nominee for president in 2008. He uh, was the primary author of a caption and trade bill to curb emissions. Mitt Romney was the Republican nominee for President in 2012 and he towards the end of his Senate career was openly calling for a price on carbon. So there was a time when climate wasn't political. It's gotten political and I think both sides are to blame. On the political left, um, if you're not for full decarbonization by tomorrow, you're considered a climate denier. Um, there's a little bit more room for disagreement on the political right. There are plenty of folks like myself, um, who believe uh, uh, in the need to decarbonize to address man's impact uh, on the climate. But there are certainly plenty, uh, uh, who believe, even those who believe that man is having an impact on the climate, um, uh, don't believe it's that urgent a need to address. And uh, I, I'm hopeful we can take some of the politics out of decarbonization and the energy transition, uh, and work towards a carbon free future without sacrificing reliability, affordability and economic growth. I hope we can get there. But um, uh, uh, as my kids call it, as of the big 25, uh, uh, we haven't uh, seen much progress on that.

Karan Takhar: That's super interesting regarding how John McCain was one of the authors of the cap and trade bill and then Mitt Romney and.

Neil Chatterjee: All right, my daughter's correcting me. I need to edit it. It's the big 2 5, not the big 25. No, sorry. What is it?

Karan Takhar: It's important clarification.

Neil Chatterjee: Yeah, important clarification. I gotta get the kid, the kid lingo. Right.

Karan Takhar: The big two five. All right. And the big two five.

Neil Chatterjee: Yeah, I gotta edit that in.

Karan Takhar: Got it. We'll do. We'll do for sure. So in the big two five, how do you feel like the two sides can be brought together for like you said, uh, helping to decarbonize but also maintaining the reliability, the affordability piece of things. Are there any specific areas within the broader space more generally where you feel like there is a pretty good opportunity right now for bipartisan cooperation? And then after that I would love to just segue onto the larger question of whether you think there is room to come together on the climate issue longer term?

Neil Chatterjee: Yeah, look, uh, I think there is a big opportunity right in front of us. Um, and I think it's, uh, around, uh, A.I. i think A.I. is going to be the game changer. I think AI, um, is a unifier, because the reality is A.I. is going to be necessary, um, for national security purposes. And it's, uh, incumbent upon America to win the AI Race against the Chinese Communist Party, so that we don't allow an autocracy to dominate the technology of the remainder of the 21st century. There are militaristic implications, national security implications. You know, warfare of the future is on the line depending on who wins this AI Race. And I think that is the sort of thing that can unify Americans. And the reality is that in order to win the AI Race, we're going to need a tremendous amount of power, a tremendous amount of electricity. And I actually do think that the, The. The AI Race has the ability to break us out of this partisan logjam that we've kind of come into when it comes to decarbonization. I think that on the political left, there has to be a recognition that we cannot possibly win the AI Uh race while keeping energy affordable and reliable without fossil fuels, without natural gas in particular. Um, and on the political right, I think there needs to be a recognition we can't win the AI race with fossil fuels alone, that we're going to need all sources of energy, like solar and storage and geothermal, um, but also. And nuclear, but also negawatts things like grid enhancing technologies, like dynamic line ratings, virtual power plants, demand response, energy efficiency, um, uh, Ders. These are all things that can help us win the AI race. But it's going to require us to. To rise above our political differences and come together in common purpose, which is, you know, to. To. To win the AI Race for security purposes.

Karan Takhar: Yeah, I love that. I think, uh, I think this is such an important point because as. As we progress, uh, I've just been reflecting on, like, how did we get to a place where there's so much contention on energy and is attending a webinar recently with a leading Republican, uh, lobbyist, where he was the person speaking, and someone asked him whether what's been happening with the big beautiful bill, which I know you've probably been following closely, and then the EO that came out a few days after is sort of in the framing of retribution or. Actually, no, I think what he asked was whether this will set a bad precedent for future administrations by targeting one niche of energy supply sources, and whether that then will set a bad precedent for future administrations to then maybe target, uh, the opposite, uh, of the energy spectrum in quotes. And his response was, well, if you look at what happened in the last four years, for better or for worse, not making a opinion on policy, but they objectively, um, denied any new permits on federal lands, uh, for oil, didn't allow any new LNG terminals to be stood up. So, effectively, what we're seeing now already happened, except towards fossil fuels. Would love to hear your thoughts generally on how we got to where we are, and if you could respond to that.

Neil Chatterjee: Yeah, look, uh, it's unfortunate, to be totally honest. When I first came to Washington in the early 2000s, and energy was not political, it was geographic. It was based on what was underneath your feet and what was above your head. Um, in my early days as a young congressional staffer, the chair and the ranking member of the Senate Energy and Natural Resources Committee, which is the principal committee with, uh, jurisdiction over energy in the Congress, the chair, the ranking member, one Republican, one Democrat, were both from New Mexico, Domenici and Bingaman. And in those early years uh, of, uh, the Bush administration, the Senate majority swung back and forth several times and the gavel switched hands several times. But the agenda of the Senate Energy Committee never changed because Domenici and Bingaman were doing what was in the best interest of New Mexico, not the Republican Party or the Democrat Party. And in those days, there were Democrats in Appalachia who had much more in common with Republicans in the south than they did with their own Democratic colleagues in the Northeast or on the west coast, and vice versa. And so, um, steadily over time, I think as environmental policy got swept into energy policy, energy started to become more politicized. And we have now found ourselves in this place where we are sort of calcified in this antiquated notion that if you're for fossil fuels, you're of the political right, and if you're for clean energy and climate solutions, you have the political left. And I really think that is an outdated mode of thinking, but it's hardened and both parties are responsible. So in response to that Republican lobbyist, like, you know, he or she. They're right. Um, just. You don't have to look at permitting on lands or oil or lng. Pauses. Uh, look at the Inflation Reduction Act. Most of the policy in the Inflation Reduction act would have garnered bipartisan support. I mean, we're talking about a bill that was all carrot and no stick. And these are tax incentives. These are things Republicans largely support. Now, maybe some of those incentives wouldn't have been as long, wouldn't have been as generous. But had there been a, uh, bipartisan effort to maybe marry the tax package that compromised the incentives of the inflation Reduction act with, say, permitting reform. And you attach it to, instead of what became the inflation reduction act, to the bipartisan infrastructure bill, you probably got 20 plus Republican senators, and then we're not even having a conversation about energy in one big beautiful bill. But unfortunately, because they couldn't come to consensus, Democrats in 2022 opted to use reconciliation, the same vehicle that was used to execute on, uh, the one big beautiful bill, which is an inherently partisan legislative tool designed to circumvent the minority party and the filibuster in the Senate. So as a result, every single Republican senator, every single Republican congressman, whether they supported the underlying policy or not, voted against the Iraq. And that brings us to the big two, five, and the one big beautiful bill. Every Democrat voted against it. And you had Republicans in an awkward spot because they're seeing some of the benefits of these incentives that were deployed in the ira. They wanted to preserve them. But the politics, uh, because of the manner in which the IRA had been enacted, and now one big beautiful bill was being enacted, um, it made it much more partisan than it needed to be. I actually think for the most part, um, the bill turned out pretty well. You know, first and foremost, it prevented, uh, you know, the expiration of the Tax Cuts and Jobs act, which would have led to a tax increase on all Americans. So that's the most important part of that bill. Energy aside, uh, we avoided a tax increase on every American on the energy side. Look, um, I don't believe I'm a big supporter of clean energy, obviously. I don't believe this industry needs to be beholden to subsidies forever. But I do think it's unfair to pull the rug out from underneath people who invested capital based on what they thought the rules of the road were at the time. And so I think what the bill did was, at least in certain areas, with certain incentives, provide a ramp, provide a little bit of a Runway so that folks who had made investment decisions based on what they thought the law was, they had some time to pivot their business model to move away from subsidies. And, uh, will there be some pain in the short term for certain elements of the clean tech sector? Absolutely. I don't mean to sugarcoat it, um, but I think the companies and entities that survive this period are going to come out stronger on the other side and are going to be more investable businesses. So I actually think, um, while I understand the concern being expressed by many clean energy Advocates, um, short term pain, I believe will lead to long term gain. For the clean energy sector.

Karan Takhar: What are your predictions for clean energy in the next 10 years and then also for natural gas?

Neil Chatterjee: Very bullish on both. Uh, as I stated earlier, AI is going to drive a tremendous surge in demand. We're going to need every available electron. And it's not just AI, it's cloud computing and quantum computing. Vehicle electrification, building electrification, uh, semiconductor manufacturing, a reshoring of manufacturing in the U.S. crypto, Bitcoin mining, streaming services, these are all incredibly energy intense endeavors. We've been very fortunate in this country that over the course of the past couple of decades, it's kind of what allowed, quite frankly politics to infect energy policy. We've been blessed by having relatively flat demand. And when we've had increases in demand, you know, we've met those increases with greater efficiencies. We haven't seen this type of surge in decades. And so, um, I think it's going to draw upon, you know, all available electrons. And so for some of these clean energy technologies that are currently, you know, folks in the clean energy sector are concerned about the uh, you know, the elimination or ramp down, phase down of these tax incentives. Well, if demand drives the price of electricity, electricity higher and higher, suddenly you're not going to need subsidies because people are going to turn to things like residential, rooftop solar and other clean energy alternatives for the cost implications. Right. And I think the opportunity will be there. And then natural gas, I'm just sorry, it is the dominant fuel source right now. We need to figure out the supply chain issues that are, uh, constraining our ability to bring new gas online. We need more infrastructure, we need to build more natural gas pipelines, uh, uh, particularly in certain regions of the country. We have bottlenecks. We need more transmission lines to get more power onto the grid. We need permitting reform. I'm very bullish on the energy sector writ large, but in particular for me, um, as I look to the coming years, what are we going to do in the short term to add electrons to the grid? Look, the administration is taking steps to do things like keeping coal, uh, plants and aging gas plants online. That's all fine, but that's not additive. We need new electrons onto the grid. And as I said, we're probably looking at 20, 29 before we can get new gas onto the grid. We're probably a decade or more away from advanced nuclear and new nuclear coming onto the grid in the short term. To me the answer is solar plus storage with gas Peakers to balance the grid. I think that's where, uh, uh, I'm most bullish in the years ahead.

Karan Takhar: Do you think we'll get permitting reform in this congressional cycle?

Neil Chatterjee: Let's see what happens with AI and the pressure around AI. It's hard. You've got, uh, I think a consensus in the middle that understands the importance of doing permitting reform. But the hard left doesn't want to do anything to ease the process for siting natural gas pipelines, and the hard right doesn't want to do anything to, um, kind of impose costs and other burdens on transmission to get clean energy onto the grid. So with the right opposition of transmission and the left's opposition to gas, uh, if you could do away with the hard left and the hard right, I do think there is a consensus there in the middle. I just don't know how much political appetite there is to do it. I kind of felt like our best shot was in the last Congress when you had divided government. I think something as complicated as permitting reform sadly requires divided government because it requires compromise. When one party or the other controls all the levers of power, it's tough to break out those compromises.

Karan Takhar: What do you think would be the top one to three issues if you were to have, uh, impact on the legislation and permitting reform that you think would create the most transformational but also feasible to get through change?

Neil Chatterjee: Reasonable judicial review and reforms to NEPA on the pipeline side, and then dealing with siting and cost allocation on the transmission side, uh, and then finding ways to better enable, um, uh, and alleviate some of the congestion in the, uh, interconnection queue. We do those three things, the energy economy will take off like a rocket ship.

Karan Takhar: Thank you. Thank you for providing all of that insight. I think is all really important issues and appreciate your perspective across each. I'm just curious, as someone who's worked in this space for so long in roles that really did actually impact, uh, what's happening on the ground in pretty sizable ways. Are there any views that you've held strongly in the last 10 years that you've since changed your mind on?

Neil Chatterjee: Uh, I mean, I've changed my mind as variables on the ground have changed. Right. Um, I think technology, uh, has been, uh, the principal change agent as we've seen innovative new technologies come about. Um, it's pretty exciting. And so, yeah, look, I'm a Republican from Kentucky who worked for Mitch McConnell and was appointed chairman of FERC by Donald Trump. I spent almost a decade of my career working with Senator McConnell advocating um, for his constituents who comprise in the energy sector of the coal industry and miners. Um, I probably didn't look that curiously at clean tech back then because I was focused on advising Senator McConnell when I got to FERC and I had a platform of my own and um, I was able to impact policy directly um, as a principle. Um, I saw the exciting opportunities uh, in advancing technologies and I used my platform at FERC in what I thought was a conservative approach to regulation, um, affirmative regulation, basically removing barriers to entry so that resources like energy storage and aggregated distributed energy resources to, could compete and be compensated for all of their attributes for capacity for energy, for ancillary services. And uh, yeah, I'll be honest, probably when I was an aide working for Senator McConnell, I didn't even know what a DER was. And then one of my proudest achievements uh, in my years at ferc was uh, FERC, uh, order 2222 which enabled aggregated distributed energy resources, uh, to participate in the competitive uh, wholesale power markets. Uh, uh, and yeah, I probably didn't even know what a Der was, you know, uh, uh, 10 uh plus years ago.

Karan Takhar: Any advice to people who are currently trying to work on uh, similar types of orders that uh, aren't necessarily maybe the most popular in the moment but can um, can lead to good on the ground implementation. Like what were some of the key learnings just in terms of trying to actually get that uh, piece uh, of legislation or a piece of notice through,

Neil Chatterjee: make it as boring as possible, take the politics out of it, make it weedy and wonky and technical and let that prevail. I think when energy policy is too exciting, the politicians interfere and ruin it. When it's boring and the nerds are in charge, you get constructive outcomes without any of the ancillary drama. Let's make energy policy boring again. We pull that off and we can get good things done for the future

Karan Takhar: as it pertains to actually being the FERC chair and the role and the personal element of that. So I usually have the man in the arena quote, behind me and I recently had I think one of your colleagues, uh, at the time, Andrew Wheeler on the podcast, also deputy Dave Turk. And uh, I'm curious to hear how, how the actual role and like how you handle the pressure and like what the day to day looks like generally how many hours are you working, uh, and handling the travel and just curious to get a sense of how one actually operates in these pretty high profile roles.

Neil Chatterjee: Yeah, look what was interesting to me is I came to FERC at a time where, uh, the spotlight on the agency just got brighter and brighter and the scrutiny became more and more intense. Now, some would argue that I contributed to that kind of, uh, chicken and egg situation. What came first? Did FERC suddenly become, uh, come out of the shadows or did Neil force FERC out of the shadows? I don't know. But irregardless, there was just a lot more attention paid to ferc, uh, and has been since. Right. You think about FERC in the early 2000s, mid to 2000s, late ox, it was a sleepy, wonky technical agency that didn't garner a lot of attention. Now, FERC's in the news, mainstream news all the time. It used to be if the President of the United States knew a FERC commissioner's name, that meant something went very, very wrong. Now, presidents of both parties are individually interviewing potential candidates for ferc because that's how important the visibility of the agency has become. The agency has always been really, really, really important. I mean, when you think about our, uh, core function, our core responsibility, keeping the lights on, there's not a more significant and daunting task than that. Um, so it's always been important. It's just gotten a lot more attention lately. And so with that scrutiny. Look, I made plenty of mistakes. Um, I was maybe a little bit too flippant in press conferences, or I was a little punchy, uh, uh, on, uh, and maybe didn't fully appreciate that my words could move markets. And it took some learning and maturation, uh, to understand, like, whoa, this is a pretty heavy role, uh, and I've gotta be more judicious in how I go about it. Anyone who steps into a new job, uh, they grow in that job over the course of time. I can say definitely I was a much better ferc, uh, uh, chair by the end of my tenure than I was at the beginning.

Karan Takhar: Amazing. Amazing. As we wrap up here, a final question. Um, because there are a good amount of listeners who do lean younger, uh, and who are probably familiar with. We're probably glad that your daughter helped fix, uh, the big 25 to big 2.5 lingo there. And given that, reflecting on your career, do you have any piece of advice, uh, that you'd give to a few categories of people? One, who is fresh out of college, trying to figure out what they're trying to do, and then secondly, someone who might be in their early 30s who, uh, is on the energy track and, um, is just continuing on the journey. What pieces of advice would you have for those two types of people, yeah,

Neil Chatterjee: work in the energy space. Look, we're going to need it. Energy is everything. It's the core to everything. And some of the challenges we have right now, quite frankly, they stem from the fact that there aren't enough young people going into energy. They're going to Wall street or they're going to other, uh, fields. Um, one of the big challenges that are resulting in these clogged interconnection cues, it's a human resource challenge. We don't have enough people to do these complicated studies, uh, to move forward with these applications in these cues. And so there's huge opportunities in energy. And so whether you're coming out of college or you're early to mid career, keep working at it. There's so many rich opportunities in energy. And I think the most important thing, um, I think they're AI proof. I think energy jobs, um, are going to be needed to be done by human beings working in conjunction with AI, but I think largely working in the energy sector, um, you're going to AI proof yourself. And it's a huge opportunity and we're about to hit a demographic cliff. I saw it at ferc. I saw it when I was uh, uh, in the private sector. A lot of senior level experience is retiring and there aren't a lot of junior level folks coming in. And that while it's going to present a challenge, also presents a huge opportunity for young kids coming out of school and folks who are early to mid career.

Karan Takhar: Did you expect that you'd ultimately become the FERC chair in a role similarly at that level? And what, looking back, do you feel helped facilitate that path for you?

Neil Chatterjee: Yeah, never. I couldn't have imagined it, uh, in a million years, you know, um, the son of Indian immigrants, you know, growing up in Kentucky, uh, uh, if you had told me someday I'd have this opportunity, uh, as a kid, I never would have believed it. And it really hit home, you know, in my travels as FERC chair, I actually went to the Czech Republic and I met with my counterpart in Prague and he made a comment to me that really resonated. He said, neil, he said, uh, you should be very proud to be an American. Because he said only in America could the son of Indian immigrants rise to a position like this. He's like, it would never happen, uh, in the Czech Republic. And uh, that was a pretty awe inspiring moment, um, that caused me to reflect upon my own experience. Yeah, I never would have thought as a kid that I've had the uh, the opportunities that I've had, and I hope I'm not done yet. Uh, who knows? Like, uh, you know what, What I can't even envision today, I got a lot of career left in me. We'll see where this, uh, where this goes.

Karan Takhar: Final question. Can you point to specific qualities or, uh, experiences along your journey that you feel were instrumental in getting you to where you are today?

Neil Chatterjee: And this is important for the young people, uh, who listen to this. Um, you gotta show up, you gotta be in the office, and you gotta develop mentors. Something happened during the pandemic. People got accustomed to working from home. And, you know, I think a lot of people thought they found a cheat code, like, oh, wow. Like, I can make a Washington, D.C. salary and live in my parents basement in Albany and pocket that money and work remotely. And this is amazing. And what they don't realize is, like, I didn't become chairman of FERC by accident, right? I didn't do it because I'm immensely talented. I had a lot of help. I had a lot of people who took interest in my career and helped teach me and helped me advance and recommended me and pushed me and spent their own, you know, political capital to push me forward. And that only happens because I got to know them, because I came to the office every day. Uh, I think it's a m mistake. I'm not saying it's impossible to develop a mentor mentee relationship via zoom, but it's way, way, way harder. I think when you're in the office and you're engaging with folks more experienced than you, ask questions, learn from them, work hard, be humble, keep your head down, earn their trust, and people will help you rise. Nobody can do it on their own. Everybody needs help. And to develop those relationships, I strongly believe you got to be in the office.

Karan Takhar: Amazing. Well, thank you so much, Neil, for taking the time and sharing all of your insights. I've personally, uh, been inspired by hearing you speak, speaking to you directly, and, uh, really appreciate you taking the time. Thank you.

Neil Chatterjee: Thanks again for having me back.

Karan Takhar: Thanks so much for checking out the Zenergy podcast. If you enjoyed today's episode, please take a moment to rate and subscribe to the podcast. It would mean so much to me and the rest of the team. We release episodes every Thursday, so stay tuned for all new episodes featuring industry leaders building a cleaner, greener future for us all. See you next time.