Reply to Our Challenge of Morgan Stanley’s Electricity Exports
By Tyson Slocum
Read the full pdf of our filing here MorganStanleyExportReply
Today we replied to Morgan Stanley’s answer to our December 22 protest. The U.S. Department of Energy has consistently taken the position that an energy emergency exists in the United States generally, and in the Western Electricity Coordinating Council (WECC) Northwest assessment area specifically. Indeed, after Public Citizen filed its protest in this proceeding, the Department reiterated its position that “an emergency exists within the [WECC] Northwest assessment area.” With respect to the WECC Northwest assessment area, the Department stated that the asserted emergency condition resulted from “increasing demand and shortage from accelerated retirement of generation facilities [that] will continue in the near term,” that such demand and shortage “are also likely to continue in subsequent years.” The Department also warned that the emergency situation “could lead to the loss of power to homes, and businesses in the areas that may be affected by curtailments or power outages, presenting a risk to public health and safety.”
As explained in Public Citizen’s protest, so long as the Department stands by its determination that emergency conditions exist, it cannot, without reasonable explanation, grant Morgan Stanley’s application to renew its authority to export electricity to Canada. Under Section 202(e) of the Federal Power Act, the Department shall approve an authorization to export power “unless, after opportunity for hearing, it finds that the proposed transmission would impair the sufficiency of electric supply within the United States or would impede or tend to impede the coordination in the public interest of facilities subject to the jurisdiction of the Commission.”
The Department interprets the “sufficiency” prong of Section 202(e) “to mean that sufficient generating capacity and electric energy must exist such that the export could be made without compromising the energy needs of the exporting region, including serving all load obligations in the region while maintaining appropriate reserve levels.” To address this prong, the Department “examines whether existing electric supply is available via market mechanisms, and whether potential reliability issues linked to supply problems are mitigated by reliability enforcement mechanisms.” In assessing reliability, in turn, the Department “focuses on the prevention of cascading outages and other problems that could result from inadequate resources.” The Department interprets the coordination prong of Section 202(e) “primarily as an issue of the operational reliability of the domestic electric transmission system” and, “[a]ccordingly, the export must not compromise transmission system security and reliability.”
It is self-evident that the Department cannot simultaneously conclude that (1) an energy emergency exists that “present[s] a risk to public health and safety” by potentially “lead[ing] to the loss of power to homes” and “curtailments or power outages” for businesses, and (2) export of electricity from the region affected by that emergency would not “impair the sufficiency of electric supply within the United States or … impede or tend to impede the coordination in the public interest of facilities,” as required for an export authorization under Section 202(c). The export of electricity to Canada would make that power unavailable to domestic customers affected by the asserted shortage of electricity.
Morgan Stanley’s answer to Public Citizen’s protest fails to respond to that basic point. Morgan Stanley contends that the Department has issued other export authorizations while the asserted energy emergency has been in effect. But Morgan Stanley does not contend that the Department’s prior decisions have ever grappled with the inconsistency between declaring an energy emergency on the one hand and permitting exporters to send power out of the country where it would be unavailable to domestic customers supposedly at risk of inadequate power supplies.
Morgan Stanley also contends that granting its application would not prevent the power plants subject to the Department’s Section 202(c) orders from remaining available to operate. But that is beside the point. The Department’s decision to order power plants to remain operational under Section 202(c) rests on its determination that an energy emergency exists. Even though an export authorization would not prevent a power plant from operating pursuant to a 202(c) order, the power produced by such a plant (and other plants), if exported, would not be available to domestic customers. Thus, a decision to authorize the export of electricity from the United States cannot be reconciled with the determination under Section 202(c) that energy emergency exists that requires obsolete power facilities to remain operational.
Morgan Stanley notes that Section 202(c) orders are in effect for 90 days at a time, while an export authorization would be in effect for 5 years. But that makes no difference here. First, the Department has maintained the view that an energy emergency currently exists, and Morgan Stanley does not suggest that the Department delay grant of its export authorization until the Department concludes the asserted emergency has ended. Second, the Department has predicted that the asserted energy emergency, including in the WECC Northwest assessment area, is “likely to continue in subsequent years.” Finally, the Department has issued seriatim 202(c) orders for various plants, indicating that the Department believes it has the authority to require plants to remain operational beyond the 90-day period statutory limit.
Morgan Stanley asserts that sufficient power will remain for domestic consumers because the power it exports “will be surplus to the needs of the selling entities” and because it “currently has no long-term electricity export commitments, and exports are made based on as-available power.” But Morgan Stanley’s application represents that it “has purchased, or will purchase, the electric power that it may export” on “either a firm or an interruptible basis.” And Morgan Stanley “has rights to certain generation capacity and energy that it has purchased from third parties under long-term contracts.” Nowhere in its application does Morgan Stanley represent that it will not enter into new long-term export commitments in the future, or otherwise outline how it will ensure that its export of power does not exacerbate the energy emergency that the Department claims to exists in the WECC Northwest assessment area and nationally. Instead, Morgan Stanley commits only to abide by any future restrictions on exports that may be imposed. That is an insufficient basis for the Department to conclude that grant of Morgan Stanley’s application is consistent with the standard Congress set out in Section 202(e) of the Federal Power Act.
Finally, we remind the U.S. Department of Energy that it has an obligation to serve all parties in a docket. Public Citizen has no record that DOE served us its July 11, 2025 Order No. EA-479-A or its June 10, 2025 Order No. EA-284-G.