July 2, 2018

FERC Clears Path for Corporate Grid Operator to Jack Up Prices for Households, Hurt Renewables and Prop Up Uneconomic Power Plants

Statement of Tyson Slocum, Director, Public Citizen’s Energy Program

At 8:50 p.m. Friday night, the Federal Energy Regulatory Commission (FERC) voted along partisan lines 3-2 on a sweeping order that clears the way for the nation’s largest private grid operator, PJM, to implement policies not dissimilar to what U.S. Energy Secretary Rick Perry clumsily has attempted: the rewrite of power market rules to promote fossil fuels at the expense of renewables – with consumers picking up the multibillion-dollar tab.

Public Citizen predicted a year ago that efforts by private Regional Transmission Organizations (RTOs) such as PJM were a greater threat to consumers and the climate than the more high-profile efforts by Perry and the U.S. Department of Energy (DOE). Friday night’s order confirms that the current majority of FERC commissioners are willing to greenlight radical efforts by RTOs to force consumers to pay higher utility bills so certain natural gas and coal power plants can earn more profits.

PJM, the private, corporate grid operator for 65 million Americans in 13 states, claims that state policies promoting renewable energy (and, in some states, nuclear power) are unfairly impacting power markets by driving prices too low, and that this threatens the integrity of the market. PJM, a private membership corporation influenced by its power plant and transmission owners, long has decried the impact of the growth of inexpensive renewable energy spurred by state policies.

As Public Citizen pointed out in congressional testimony last year, power markets are undergoing profound disruptive changes triggered mainly by significant growth of renewable energy. These disruptive changes are driving costs down, which benefit consumers but draw the ire of competing power plant resources such as natural gas, coal and nuclear power. The rise of renewables does not present reliability or resilience problems today, but as with any disruptive challenge, modest regulatory reforms are prudent to accommodate such changes. But such reforms cannot serve as a smokescreen by disadvantaged (and politically powerful) incumbent generators to slow or stymie disruptive changes simply because of the impact on their financial self-interest. Devoid of adequate evidence, FERC’s Friday night order imposes a radical and truncated timetable simply to accommodate the greed of generation owners that are on the losing side of today’s disruptive changes.

The order declares war on state renewable energy mandates and may preview the method by which FERC accommodates future DOE action to bail out coal and nuclear baseload power plants using national security as an excuse.

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