“Well, that was a funny Tuesday last week.”

That was Montana PSC vice-chair Travis Kavulla, the outgoing president of the National Association of Regulatory Utility Commissioners, capturing the sentiment at the group’s annual meeting this week.

For the most part, state utility regulators and sector stakeholders assembled in La Quinta, Calif., expressed a mixed of bewilderment and trepidation in the results of the presidential election on Nov. 8.

In an industry that values predictability, Trump’s election threw a number of power sector expectations into question. Whereas the paradigm in the utility industry previously pointed to Clean Power Plan compliance and deeper decarbonization, Trump has disavowed human causation on climate change and promised to gut EPA regulations while supporting the fossil fuel industry.

Throughout much of the conference, regulators and other industry watchers tested theories on how the president-elect will handle energy policy, but all added the caveat that Trump’s unpredictable campaign means any concrete policy predictions could easily be wrong.

“Right now, ain’t nobody knows nothing,” added Ray Gifford, a partner at Wilkinson Barker Knauer and former chair of the Colorado Public Utilities Commission. “There’s rank speculation going on, rank office-seeking going on … but nothing has settled.”

Even if predicting a particular appointee or energy policy point could prove foolhardy in the Trump transition, a few broad sector narratives emerged from conversations in La Quinta.

Along with the widely-held views that the Clean Power Plan will be scrapped and renewables growth will continue, sector leaders expect a friendlier policy environment for the natural gas industry. That could allow utilities to burn more gas for generation, putting the global climate at risk and potentially exacerbating existing issues with baseload generation in organized markets.

The new era of natural gas

Despite the Trump campaign’s promises to bring back the coal industry, natural gas is the king of the power sector today. Gas generation is slated to surpass coal in the U.S. power mix for the first time this year and its low cost has encouraged many utilities to shift their generation to the cleaner fuel.

Even if the CPP and other EPA air regulations are lifted, few expect utilities to invest in new coal plants. But Barry Smitherman, a former Texas PUC commissioner, said existing coal plants could get a “new lease on life” in vertically-integrated states, with fewer carbon and air quality rules allowing them to “run longer than anticipated.”

“I think it’s safe to say that coal plants will have longer lives and perhaps even recapture some market share in the fully-regulated markets,” Smitherman said.

The situation is more complex in deregulated states, however. In the U.S.’s wholesale electricity markets, more coal generation will weaken demand for natural gas, helping keep its price near its current low levels. Coupled with more drilling on federal lands, fewer rules on fracking and methane emissions would create conditions for "the supply of gas to go up as well,” Smitherman said.

“So if you have a supply picture for gas that’s increasing and a supply picture for a competitor fuel — coal — that’s also increasing, gas prices are likely to be under [downward] pressure,” he said. “In wholesale competitive markets like ERCOT, gas will continue to be dispatched earlier than coal, so we can continue to see that in spite of attempts to eliminate regulations affecting coal, in competitive markets … gas would continue to play a heavy, heavy role.”

Gas pipelines and FERC

More downward pressure on prices for gas-fired generation could come from easier pipeline permitting. In gas-constrained regions like New England, lack of ample pipeline capacity in the winter months can result in higher electricity prices as pipe space is used to serve home heating loads.

“Gas fired generation includes that secondary cost of gas transportation in their daily bids, so this just gets passed through the market and results in high prices,” said Maine PUC Chairman Mark Vannoy.

Throughout the Obama administration, pipeline firms expressed frustration with what they saw as an ad-hoc approach to regulating gas and oil infrastructure. While some projects would receive little national attention, others — like the Keystone XL or Dakota Access pipelines — would attract protest attention from environmentalists, sometimes enticing Obama to intervene.

Gas insiders at NARUC said they don’t expect environmentalists to have the ear of the new administration or its appointees, so siting and constructing pipelines could get easier.

“Going up to two or three weeks ago, you had a lot of analysts expecting that we were never going to build another interstate pipeline again,” said Christopher Guith, senior vice president at the U.S. Chamber of Commerce’s energy policy shop. “We’re in a whole new world now."

After Trump’s election, environmental groups promised to double down on their activism, but officials at NARUC expected the new administration to take the wind out of their sails.

Former FERC Commissioner Tony Clark pointed out that in recent years, the Obama White House has given ammunition to pipeline protesters who want to limit the buildout of any fossil fuel infrastructure.

Along with more critical EPA comments, the White House’s Council on Environmental Quality issued a guidance in August requiring federal agencies to consider greenhouse gas emissions when evaluating any federal action under the National Environmental Policy Act (NEPA), which governs FERC pipeline approvals.

Clark was dismissive of the new directive, saying he thought FERC was already taking GHGs into account to the extent it could. But he noted that the “savvier” climate protesters were already using the NEPA review to challenge pipeline approvals before the CEQ action, and the guidance gave them new grounds to challenge the commission.

“Just the fact that it was out there changed the level of uncertainty in the process because we knew [our decisions] would be challenged in court,” he said.

Under a Trump administration, that CEQ guidance is likely to be eliminated and critical comments from federal agencies like the EPA will dry up in pipeline proceedings. In fact, Clark expects the single biggest change at FERC during the next four years won’t have to do with who Trump nominates for the body.

“One of the places where I think you’ll see more immediate impact on the work FERC does is not who's sitting in those particular seats on the commission itself. It's going to be those agencies that provide input to FERC,” he said. “While I think the agency takes seriously any of the comments in the record ... there's special attention paid to other federal agencies.”

Climate consequences

If all the predictions of greater gas production and eased pipeline permitting come to fruition, the trend is that gas prices are “likely to stay low for the foreseeable future,” Smitherman said. “Certainly that means in competitive electric markets gas will continue to play a dominant role going forward.”

The continued primacy of gas could help keep a lid on U.S. electricity rate growth and integrate more variable generation onto the system, since modern gas plants tend to be flexible generators. But it also presents problems to policymakers that could persist after Trump leaves office.

First, continued buildout of natural gas plants and pipelines puts the world at risk of not meeting the Paris Climate Accord, which seeks to limit warming to 2°C this century.

A growing body of evidence suggests the world is already behind the needed trajectory of emissions reduction to meet the Paris goal, and investments in more long-lived fossil fuel assets could commit the world to the most catastrophic consequences of climate change if they are not retired early.

“[F]or a 50% probability of limiting warming to 2°C, assuming other sectors play their part, no new investment in fossil electricity infrastructure (without carbon capture) is feasible from 2017 at the latest, unless energy policy leads to early stranding of polluting assets or large scale carbon capture deployment,” Oxford researchers wrote in March.

To be sure, the U.S. power sector is only part of that equation and fossil fuel investments overseas will also play a role. But U.S. leadership on domestic climate policy was largely seen as a driving force that compelled over 190 nations to commit to the historic Paris accord.

With the U.S. backtracking, that international commitment to decarbonization could be at risk. And researchers noted that the situation is actually more dire, since the transportation and industrial sectors around the world are not, in fact, “doing their part” — their emissions are increasing here and abroad.

Organized market upheaval

The climactic concerns of natural gas did not play a large role at the NARUC meeting and no environmental groups were featured as panelists to address gas pipeline protests or the underlying “keep it in the ground” movement. But regulators did lend their attention to another impact of gas primacy — continued upheaval in wholesale markets.

In recent years, the low price of natural gas generation, coupled with efficiency advances and the influx of cheap renewables, has lowered clearing prices in the nation’s wholesale electricity markets so that many aging coal and nuclear plants cannot compete.

More than 50 GW of coal are scheduled to retire between 2012 and 2020, according to SNL, and nuclear plants in Illinois, New York, California, Massachusetts and elsewhere are at risk of going offline by the mid-2020s as well.

Some states have responded, pursuing actions outside the electricity markets to ensure they have reliable electricity supply and do not become too reliant on gas. In Ohio, for instance, regulators approved income supports for aging coal and nuclear generation before being blocked by FERC, pushing AEP to sell its merchant generation and FirstEnergy to revise its proposal.

In New York, the PSC opted for a new zero emission credit program to help keep struggling upstate nuclear plants online while avoiding the FERC jurisdiction that scuttled the original proposals in Ohio.

With natural gas remaining dominant and renewable energy growth continuing, NARUC attendees expect those issues in wholesale markets to continue, if not worsen.

“These regional markets though are being roiled by state action underneath them,” said Gifford, the former Colorado regulator. “That creates a big question for FERC.”

In an August white paper, Gifford and his colleagues at Wilkinson Barker Knauer compiled all the recent around-market actions in states and argued that FERC must do something to protect its market constructs, or risk seeing states turn back to full regulation of their utility sectors.

Clark reinforced that narrative at NARUC, saying markets could face an “existential question” if federal regulators cannot find ways to mitigate for market disruptions.

While predicting the perspective of any Trump-appointed commissioner is difficult, Clark said he did not see any likely grounds for how state generation policies could be pre-empted under the Federal Power Act. But the commission may well find grounds to intervene in cases of specific generation support programs if they distort market operations too much.

“There may be such an impact on the market itself that the commission might say it has to take action to protect the integrity of the marketplace, which might be mitigation in some way or another,” Clark said. “If it feels there is not a proper pricing model that’s being developed in its jurisdiction, then it has to do something.”

Typically, FERC deals with such issues through mitigation — creating new products or market structures to encourage fair price formation. But given the size of some of these around-market efforts, Clark questioned whether there a certain point “where you just can’t hit that mitigation button anymore.”

“That gets us to a very existential question for the markets themselves,” he said, “because if FERC can’t create products or structure the market in such a way that you’re able to get proper price signals … you have a real existential crisis in the market and you have to rethink how you structure products in that market. I think we may be getting toward that.”

No one at NARUC was ready to give up on the organized market structure yet, but all agreed that trying times are ahead for the nation’s wholesale markets. As Gifford put it, “it’s going to get worse before it gets better."