Author: Jeff Turcotte, assistant vice president, Government Affairs, EPSA
The Bottom Line: As a new Congress convenes, EPSA continues to focus on the benefits that competitive markets bring to ratepayers with 4 top policy priorities to help secure reliable electricity, mitigate costs, advance needed infrastructure development, combat cyber and physical threats, and reduce power system emissions.
Wind turbine field. As the energy transition progresses, policymakers must support competitive markets to ensure consumers can access power affordably and reliably. Credit: iStock/dar1930
As the curtain rises on the 118th Congress, EPSA and its member companies look forward to the opportunity to play a constructive role in several policy areas. While the conventional wisdom downplays the likelihood of significant policy progress being made with a divided Congress heading into a presidential election cycle, EPSA believes that there is an excellent opportunity to keep issues affecting electric grid reliability and the benefits of wholesale energy markets at the forefront of the energy discussion.
Keeping that in mind, EPSA has identified several key policy issues as priorities in 2023.
- Working with the U.S. Department of Energy (and other relevant federal agencies) to keep electric grid reliability at the forefront during the development of Congressionally directed clean energy programs.
2022 closed with a stark reminder of the challenges facing U.S. power system, with severe weather and high demand prompting warnings and even rolling blackouts in for Duke Energy utility customers in North Carolina and South Carolina and customers throughout the TVA service territory. Keeping the lights on is not just a matter of comfort and convenience – it can be a life-or-death scenario. Reliability must remain the top priority for policymakers and all involved in the supply and delivery of electricity.
Through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, Congress has empowered a number of federal agencies with hundreds of billions of dollars to incentivize investment in a variety of clean and renewable technologies. (The recent guidebook released by the White House on the myriad of programs available through the IRA outlines just how expansive this effort will be.) In the Department of Energy Organization Act of 1977, Congress clearly desired (among many responsibilities) for DOE to “promote the interests of consumers through the provision of an adequate and reliable supply of energy at the lowest reasonable cost” – something EPSA has long advocated for and supports today. As the IIJA/IRA funding is brought to bear, EPSA will continue to urge agencies to be mindful of the effect of these federal investments on electric grid reliability and to drive those investments to deliver greater reliability.
As the sequence and timing of these programs becomes clearer, EPSA is eager to play a constructive role in engaging with various federal agencies to keep electric grid reliability at the forefront. Targeted, directed investment in specific clean energy technologies – whether they be done through new federal directives or ongoing state directives – will affect the ability of wholesale markets to ensure reliability. EPSA will continue to urge policymakers (at all levels of government) to be mindful that injecting hundreds of billions of dollars into the energy industry does not happen in a vacuum, and that adverse impacts on reliability must be addressed. Reliability should remain as central focus as this new federal investment proceeds, and reward resources that can meet policy priorities most efficiently.
- Encouraging policymakers to address the difficulties in permitting energy infrastructure, particularly generation and natural gas supply.
EPSA member companies own and operate a diverse set of generation assets across the country. The tie that binds EPSA members is a belief in the ability of competitive markets to ensure electric grid reliability, harness the power of competition to drive efficiencies, and remove the risk of investment in generation away from ratepayers. However, even the most efficient, well-functioning competitive markets returning incredibly accurate price signals can be stymied by the inability of investors to site or permit facilities. And delays in the building of new infrastructure, while allowing older infrastructure to retire, will lead to reliability challenges.
Modifying permitting processes, such as those under the National Environmental Policy Act, is not about lowering standards. But building infrastructure in the name of the clean energy transition should not be a zero-sum game, and ongoing clean energy investment must be accompanied by a commitment to ensuring a foundation of flexible, dispatchable, balancing, energy-secure generation resources. Bringing additional certainty and clarity to the permitting process is a critical part of making those investments for both the generation assets and the infrastructure that fuels them (i.e., natural gas supply).
- Raising awareness of ongoing industry efforts to secure the bulk power system.
As it has been for years, cybersecurity continues to be a top priority for competitive power suppliers and the broader industry. The bulk power system remains the only industry that owns and operates critical digital infrastructure that is subject to mandatory and enforceable security standards – a baseline that has been raised several times since it was first implemented.
Congress designated the North American Electric Reliability Corporation (NERC) as the nation’s Electric Reliability Organization. NERC is responsible for creating or updating standards under the Critical Infrastructure Protection (CIP) umbrella – standards that are ultimately approved by FERC and require mandatory compliance by the bulk power system.
The bulk power system is not static – threats are dynamic and CIP standards evolve. For instance, FERC recently directed NERC to reexamine physical security standards following the intentional damage to grid infrastructure in North Carolina in December. However, for well over a decade the industry has continued to make security a top priority and EPSA will watch closely for opportunities to promote that work. EPSA is an important member of the Electricity Subsector Coordinating Council, sitting on its steering committee and representing the unique perspective of competitive power suppliers in government-industry collaboration to protect the grid.
- Continuing to promote the benefits of an economy-wide price on carbon.
EPSA members simultaneously believe in both the importance of the clean energy transition as well as the demonstrated benefits of wholesale markets. A carbon price can be a critical tool in both reducing greenhouse gas emissions, rewarding resources that can meet reliability and environmental needs most efficiently, and protecting ratepayers from investment risk. A competitive wholesale market that defines and rewards clean energy attributes can be structured to effect desired environmental change while harnessing competitive market forces to ensure grid reliability.
EPSA remains concerned that many current public policy incentives for clean energy development (typically centered on weather-dependent resources) neglect the inevitable adverse impacts on non-subsidized resources that operate when the weather isn’t conducive to renewable energy production. However, carbon pricing rewards the most efficient flexible, balancing resources for their efficiency and accomplishes the simultaneous goals of reliable electricity production and clean energy incentives.
Of course, this is not an exhaustive list of all the policy items that EPSA will follow in 2023. We are eager for any opportunities to proactively engage on Capitol Hill and throughout the Administration to highlight the importance of electric grid reliability and the demonstrated ability of wholesale electricity markets to meet reliability goals and play a key role in the nation’s clean energy transition.