Market-based solutions are the best way to make America’s electric grid cleaner, more resilient and more reliable – all priorities highlighted last week at the Senate Energy and Natural Resources Committee’s hearing examining the Federal Energy Regulatory Commission (FERC)’s responsibilities and areas of focus.
FERC and the critical issues under its jurisdiction have become increasingly important for Congressional leadership as regulators look to craft future energy policy to both mitigate climate change and ensure reliable power. While Representative Sean Casten (R-IL)’s #HotFERCSummer has come to an end, the commission has an evergreen responsibility to look after what is perhaps society’s most essential need – the reliable flow of electricity – while ensuring that fair competition results in just and reasonable affordable rates for energy consumers. And at last week’s hearing, FERC commissioners were joined by Senate energy leaders in voicing the need to protect reliability and find affordable solutions to reduce power grid emissions.
In his testimony, FERC Commissioner Mark Christie reiterated his commitment to reliability and affordability as the industry works to decarbonize the electric sector and told the committee that he would be sensitive to the consumer costs of FERC mandates. Christie said:
“What FERC does has a huge impact on retail rates, and retail rates ultimately drive the monthly power bills that consumers must pay. So, we at FERC always have to be sensitive to the effect of our actions on consumer costs. Reliability is not free – transmission and generation facilities must be paid for – but we need to ensure that the costs consumers pay are no more than absolutely necessary to deliver a reliable power supply.”
Committee Chairman Sen. Joe Manchin (D-W.V.) agreed, saying that reliable power was not “a nice-to-have” but something that regulators “have to get right.” Doing this, he said, depended on competition and a diverse energy mix:
“In my view the only way to do it without sacrificing reliability and affordability is with policies that spur innovation, not elimination. It makes no sense to take tools out of the toolbox because we know that none of these energy resources are 100% immune to weather disruptions, whether that be freezing wind turbines, disruptions to our natural gas production and delivery systems, or frozen coal stockpiles – all of which we saw happen last winter. We have to maintain a diverse and reliable energy mix with the technologies necessary to reduce emissions.”
Biden Nominee Must Advance Competitive Solutions
This focus on reliability and affordability should be top of mind for members of Congress as they consider Willie L. Phillips’ nomination to replace Neil Chatterjee as a FERC commissioner. As commissioner, Phillips will help make important decisions on the structure of America’s future electric grid. By nature of their scope and impact, those are decisions that will impact consumers for years to come.
EPSA is hopeful that as commissioner, Biden nominee Willie L. Phillips – and the full Commission – will maintain a commitment to competitive electricity markets and prioritize grid reliability.
EPSA recently shared this message, joining the Renewable Energy Buyers Alliance and the R Street Institute, in a letter to Senator Manchin that emphasizes priorities for current and future commissioners. We wrote that:
“As the grid decarbonizes, [ensuring system reliability] will require new approaches to ensure markets are responsive, well-designed, and the bedrock of our approach to decarbonizing the electricity system. Competitive wholesale electricity markets are the tool to ensure that job is done in an affordable and efficient manner.”
Clean Electricity Plan Raises Flags
The increased Congressional focus on FERC could not be more timely. Recent legislative proposals, wrapped into the $3.5 trillion infrastructure spending package and budget reconciliation negotiations, are seeking to tackle climate change, resilience and reliability. But one major clean energy proposal, the Clean Electricity Performance Program (CEPP), needs significant improvement to ensure it isn’t just a blank check to utilities – but delivers more clean energy technology at the least cost to taxpayers. As currently written, the CEPP would pay utilities $150 per megawatt hour (MWh) for new clean energy when the market-based price is $30/MWh – thereby slowing a competitive transition to a lower carbon grid. At the Senate committee hearing, Commissioner Danly joined legislators including Senator John Barrasso and Senator Joe Manchin in voicing concern with the impact of CEPP on electricity costs.
Competitive electricity markets have been shown to be the most cost-effective way of reducing carbon emissions and incentivizing private investment in renewable generation technology—rather than offering exorbitant payments by raising rates for consumers.
EPSA recognizes that the energy transition will require an all-of-the-above, competitive strategy to reduce emissions and maintain reliability. Congress can improve the CEPP through changes that promote innovation and least-cost clean energy procurement through market-based solutions. Voters want to see this — our recent polling with Morning Consult shows 78% of U.S. voters are concerned by the cost of the spending plan, with 70% agreeing that competitive bidding should be incorporated into clean energy programs. More than three in five voters (62%) surveyed agree that Congress should require utilities to procure clean energy at the lowest possible cost.
We will continue to engage at FERC and with policymakers and stakeholders at every level to ensure that reliable, affordable electricity remains a priority as competitive power suppliers deliver the power generation solutions needed to advance a just energy transition.
EPSA President and CEO Todd Snitchler on why “A sustainable energy transition that moves our nation and economy forward must be built on a strong foundation that doesn’t lose sight of energy policy’s fundamental purpose: keeping the lights on.“