New polling suggests a majority of American voters prefer policies the promote competition to unlock the lowest-cost clean energy options.
In a recent survey conducted by Morning Consult, a first-of-its-kind polling effort to address key features of the Clean Electricity Performance Program (CEPP), American voters overwhelmingly voiced support for competition among energy suppliers to meet clean energy goals. The CEPP is a core element of President Biden and Congressional Democrats’ spending package, estimated to contribute $150 billion to the total cost of the legislation. As discussions move forward, EPSA has actively advocated for a congressional directive requiring electricity suppliers to demonstrate that all new clean energy resources are the lowest cost option; voters agree. In fact, 70% of voters agree that competitive bidding should be part of the process for determining who is chosen to build new clean energy resources.
Competition lowers costs.
The benefits of competition are clear: the cost of clean energy in regions with competitive processes is far lower than in regions without. Unfortunately, the current CEPP does not direct competitive or low-cost clean energy procurement as a requirement to receive program funds, which risks creating misaligned incentives and gaming opportunities for electricity suppliers that may not yield the most cost-effective use of taxpayer dollars.
At a time when, according the Morning Consult poll, 78% of voters are concerned about the $3.5 trillion price tag of the current reconciliation package – with 38% saying they are very concerned – congressional leaders should be looking for every opportunity to reduce or mitigate cost. Americans want low-cost options, with 62% of poll respondents agreeing that clean energy should be procured at the lowest possible cost. A congressional directive requiring low-cost or competitive procurement as a part of the CEPP would be a big first step in the right direction.
The CEPP includes a payment of $150 per megawatt-hour (MWh) for every MWh of energy procured above a threshold relative to a baseline amount of clean energy already being procured, as a mechanism to incent electricity suppliers to buy more clean energy. However, recent analysis has pegged the cost of new clean energy closer to $30/MWh—less than one-fifth the payment proposed in CEPP. Instead of hard-coding the CEPP payment, a better approach would be aligning it with the market-based price for clean energy. Morning Consult’s poll results suggest three-times as many voters prefer policies focused on market-based mechanisms for reducing emissions than allocating taxpayer dollars to reward utilities for reducing their carbon footprint.
Economy-wide carbon pricing has voter support.
As we continue to learn what is – and what isn’t – in the reconciliation package, media reports from last week suggest carbon pricing may still be on the table. EPSA has long supported an economy-wide price on carbon as the most efficient means to reliably reduce emissions. The same Morning Consult poll found that nearly 60% of Americans support carbon pricing to incentivize emissions reductions. Importantly, a carbon price would allow the market – not policymakers – to determine which resources best reduce emissions give cost and reliability constraints. All resources will and should be allowed to play a role in reducing emissions, even those such as natural gas, which 73% of voters agree should be included in clean energy policies.
In addition to our recommendations above, we believe the following changes would improve the CEPP:
- Delegate implementation of CEPP in states with restructured electricity markets to FERC through a regional transmission organization (RTO) or independent system operator (ISO) tariff. This would ensure the CEPP is harmonized with existing wholesale electricity markets and provide the opportunity to develop a regional mechanism to facilitate the trade of CEPP credits.
- Establish single baseline compliance obligations for affiliated electricity suppliers. This would facilitate cost-effective compliance by allowing interstate trade of clean energy attributes and also create the opportunity for a regional market for clean energy attributes that could then be traded among buyers and sellers. Additionally, existing voluntary agreements between large corporate buyers of electricity (who themselves are not entities eligible for CEPP payments but represent a significant portion of clean energy demand) and renewable developers could be at-risk. By allowing compliance through the aggregation of attribute credits, entities with VPPAs could use credits obtained from those contracts to offset their load obligations in other states.
- Ensure early clean energy adopters can grow without punishment. The CEPP should recognize that clean electricity suppliers already offering 100% clean energy to their customers should be rewarded in the same way other entities are for decarbonizing the grid.
We will continue to work with Congress and look forward to developing an approach that reflects the benefits of competition and the views of the American people. We similarly urge a thoughtful approach to developing legislation that allows time for debate – a proposal of this magnitude will surely have consequences, some unintentional, that reverberate across the energy industry and we ought to fully explore what those are to ensure the American people get the best possible outcomes.
Read more from EPSA on the Clean Electricity Performance Program.
Find more Morning Consult polling for EPSA.