As the debate around the appropriate use of section 202(c) powers continues, below are some of the most recent expert reactions to FirstEnergy’s request for emergency action and the value of competitive electricity markets. Utility executives and energy policy experts have all expressed their concern over any potential government interventions into competitive electricity markets and the effect such policies would have on electricity prices.
Invoking 202(c) Emergency Powers To Grant First Energy’s Request Would Go Beyond the DOE’s Statutory Authority. “Yet such action would be a clear abuse of statutory authority. The Energy Department’s own technical report in 2017 found that the bulk power system is performing reliably. Clearly, ‘serving the public interest’ actually means letting markets run their course.” (Devin Hartman, John Hughes, Owen Kean, and Caitlin Marquis, “Electricity Customers Want Competition,” Washington Examiner, 4/11/18)
PJM Officials Argue Granting A 202(c) Order Will Raise Consumer Electricity Costs And Push Out More Affordable Energy Producers. “A March PJM report found most of the nuclear-power plants in the region were economically viable at current prices, and that while a large number of coal-fired power plants were at risk of retirement, there was more than enough existing and planned generating capacity to meet anticipated demand.Granting FirstEnergy’s request, Andrew Ott said, would only do one thing: ‘It would cost consumers more money.’ It would also undercut rival energy generators and crowd out those producing electricity from gas and renewables, such producers say.” (Erin Ailworth, Russell Gold, “Ohio Power Company Has Few Allies In Bailout Bid,” The Wall Street Journal, 4/9/18)
Peer Utilities Don’t Believe Emergency Action From The DOE Would Be The Right Policy Move. “While other power generators have closed uneconomic facilities and diversified to include more gas and renewables, FirstEnergy Solutions remains heavily dependent on coal and nuclear power, which combined make up 88% of its generation mix. ‘FirstEnergy doesn’t want to evolve,’ said Abraham Silverman, vice president of regulatory affairs at NRG Energy Inc., which operates several coal plants in the competitive power market and opposes the FirstEnergy request. Mr. Silverman added: ‘They’d rather go to the regulators and ask for a bailout.'” (Erin Ailworth, Russell Gold, “Ohio Power Company Has Few Allies In Bailout Bid,” The Wall Street Journal, 4/9/18)
Competitive Power Markets Already Appropriately Compensate Power Producers For Reliability Services And Fuel Diversity. “To begin with, FirstEnergy’s claims do not start with the correct framing of market evaluation. The company argues that its baseload plants are not compensated for their fuel security and fuel diversity benefits. But markets compensate for reliability services, not operational modes like “baseload” generation, nor do they provide explicit compensation for fuel diversity or fuel security. Markets provide incentives for participant behavior consistent with the reliable and efficient operation of the system. This allows suppliers the flexibility to decide how to provide reliable service in a low-cost, value-maximizing manner. Generators have found creative ways to ensure fuel security, motivated by having the ability to produce power during times of system stress in order to capture high prices. Fuel diversity is a proxy slogan for benefits already remunerated in the marketplace, such as risk management and reliable performance.” (Devin Hartman, “Listen To Customers, Not Rent-Seekers,” R Street Institute, 4/2/18)
Former White House Energy Economic Adviser Ben Ho Warns Any Changes To the U.S. Grid Can’t Be Rushed. “Long-term considerations for the grid in wholesale markets should focus on fuel-neutral investments and policies that keep electricity reliable, resilient, and affordable. This includes investments in transmission infrastructure, pipelines, and more storage — recommendations echoed by the organizations currently monitoring and operating our regional grids.This is an important, even critical, debate to have, but major changes to our electricity markets should not be rushed into or made in haste. It may not make great headlines, but deliberate and careful evaluation of changes to the grid is the best path forward.” (Ben Ho, “Slow And Steady: Any Proposed Changes To Energy Grid Cannot Be Rushed,” The Hill, 3/9/18)
The Director of the Environmental Defensive Fund Argues Proposals To Support Uneconomic Power Plants Are Antithetical To Competitive Power Market Dynamics. “FirstEnergy’s plea would also undermine competitive markets and stifle innovation in the energy sector. A government bailout would reward years of FirstEnergy’s backward thinking and punish other companies that have invested in cleaner, newer and smarter infrastructure, technology and services. Federal Energy Regulatory Commission, the agency that oversees the U.S. electric grid, already rejected an almost identical appeal earlier this year spearheaded by Energy Secretary Rick Perry.” (Dick Munson, “Taxpayers Shouldn’t Foot The $8 Billion Bill To Bail Out A Failing Energy Company,” The Hill, 4/7/18)