EPSA president and CEO Todd Snitchler joins the “GT Power Hour” podcast to unpack electricity markets, recent utility scandals in the states, and the high cost the FRR. He says competition and transparency are a better path forward for customers and the grid.
In the latest “GT Power Hour” podcast episode, EPSA President and CEO Todd Snitchler, former chair of the Ohio Public Utilities Commission and past state legislator, shared insight on how more competition for power generation choices can help reduce utility corruption scandals that drive up customer costs. Todd joined PJM Power Providers’ lead Glen Thomas, former chair of the Pennsylvania Public Utilities Commission and podcast host Rory Sweeney.
Listen in for a deep dive into utility scandals making headlines in Ohio and Illinois—and what the news reveals about the benefits of competitive electricity markets, energy policy and why legislation called the Fixed-Resource Requirement (FRR) that multiple states including New Jersey are exploring will raise electricity costs and is a big step in the wrong direction.
Utility Scandals Point to Bad Business Incentives
“Episode 12 (How to Handle a Scandal: A Utility Commissioner’s Guide)” kicked off with a quick rundown of recent utility corruption investigations surrounding power plant bailouts in Ohio and Illinois and what the troubling details mean for energy policy, market health and consumers in multiple states moving forward. While the circumstances surrounding each bailout are unique, a troubling trend points to certain utility efforts to raise consumer costs and seek political favor to turn a profit – rather than play by competitive market rules and find a better way to do business.
FBI agents arrested Ohio Speaker of the House Larry Householder and four associates July 21 in a $60 million federal bribery case connected to a customer-funded billion-dollar bailout of Ohio’s two nuclear power plants owned by FirstEnergy Solutions, now known as Energy Harbor.
Snitchler said efforts to secure passage of Ohio House Bill 6, the bill responsible for the bailout, included more than $30 million in influence tactics including dark money-funded, misleading advertising, intimidation and “an all-out push to… deny the people of Ohio the right to vote on whether or not the bill should stand.”
The legislation tacked a monthly surcharge onto every Ohio electricity customer’s bill, which, unless repeal is passed, they will have to pay for a period of at least 6 years—money that goes directly to the utility to supposedly prop up power plants that can’t compete with lower cost options in the market.
Just days after the FBI arrested Householder, Snitchler, on behalf of EPSA, called for the repeal of H.B. 6. He stated that rather than let competition provide the best outcome for consumers, “Money and political influence won the day and helped secure passage of Ohio House Bill 6.” Snitchler added, “When policymakers do the bidding of special interests, consumers lose.”
When Thomas brought up the Ohio Attorney General’s 82-page complaint against Householder and his associates, Snitchler noted the stunning allegations “are just the tip of the iceberg” as officials continue the investigation. He went on to say, “If ever there was a time that the public needed to have confidence that the regulators and legislators who have oversight over these monopolistic utilities are doing their due diligence, that time is now.”
Thomas added that the “interesting questions” are the ones yet to come. “How do we fix this? Protections must be put in place.”
In Illinois, there are some key similarities and differences at play. Exelon subsidiary ComEd agreed July 17 to enter a three-year deferred prosecution agreement and pay a $200 million fine based on a bribery charge related to lobbying efforts to force through the Future Energy Jobs Act (FEJA)—legislation that included a bailout for Exelon’s two Illinois nuclear plants. According to media reports, the bill will cost Illinois electric consumers $2.3 billion.
FRR: A Big Step in the Wrong Direction
Even after agreeing to pay a hefty fine, it’s clear $200 million is a drop in the bucket for Exelon – the company’s newest push for the Clean Energy Job Acts (CEJA) in Illinois is reminiscent of 2016’s FEJA. Included in this proposed legislation is a mechanism called the Fixed-Resource Requirement (FRR), which enables the company to go around the competitive power market to direct revenue to its nuclear plants before truly enabling new cleaner and renewable energy generation.
The cost to consumers? It could be as high or higher than $414 million each year, according to the independent monitor for the electricity market serving Illinois.
Illinois isn’t the only state considering an FRR. Some have framed the mechanism as a way for states to “take control” of their energy resources. But in the episode, Snitchler says that an FRR “sounds great, it’s a good bumper sticker slogan, but the reality is it’s far more complicated and far less clear about just what the costs will be and the implications are to consumers’ bills.”
In every state and scenario evaluated, the independent market monitor estimates the FRR will increase electricity costs by as much as hundreds of millions of dollars—and cripple competition to secure more market power for big utilities. FRR doesn’t give control to states. It gives control to powerful companies and reduces transparency around the true cost of power generation.
The Solution Lies in Competition
“EPSA members find themselves on the cutting edge in many ways because they have to be ready to adapt and adopt new technologies…it’s a win for consumers all the way around.” – Todd Snitchler
To wrap up a conversation that could last for hours, Sweeney and Thomas transitioned to the latest happenings at EPSA—which is the only national trade association representing competitive power generators that stand in contrast to regulated utilities. Snitchler described EPSA’s efforts to support healthy electricity markets and why competition among power providers offers the best outcomes for consumers, the grid and the environment. Competitive power suppliers rely entirely on power markets for revenues—they have to compete to be able to operate and don’t get a guaranteed return from ratepayers through a political process. Snitchler says that sets them apart.
“EPSA members find themselves on the cutting edge in many ways because they have to be ready to adapt and adopt new technologies…it’s a win for consumers all the way around,” said Snitchler. “Consumers are asking for sustainable environmental progress, and that typically means lower emissions… and our members are front and center at achieving both of those objectives.”
He pointed to how members followed market signals to retire thousands of megawatts of coal in favor of lower cost, cleaner natural gas, as well as new projects and efforts to build renewable energy and two of the biggest battery storage projects in the world.
Continued progress lies in clear market rules that provide the right incentives, said Snitchler. “What we need in order for our members and others to invest and make sound economic decisions is a durable regulatory framework. And really the consumers are asking for sustainable environmental progress. And that typically means lower emissions… And our members are front and center on helping to achieve both of those objectives.”
As Thomas and Sweeney closed with their traditional ask for advice, Snitchler offered his: “Electricity is what drives the world. We can’t just hope for the best… my suggestion is not that change shouldn’t come, and not that change isn’t good, but that we need to be thoughtful about how that change will actually be effectuated so that we don’t sacrifice reliability, that we don’t jeopardize the reliability of the grid, and that consumers are not held hostage to outrageously high costs that they can’t afford.”
Listen to the podcast episode here.
Learn more about competition: “Power Market 101: What They Are & Why They Matter.”
Learn more about the FRR in New Jersey and Illinois.
Hear how the FRR could raise rates for New Jersey customers from NJ Rate Counsel Stefanie Brand on GT Power Hour’s Podcast, “Episode 11 (New Jersey Brand Recognition).”