DOE Power Grid Study Acknowledges the Agency Has No Authority, Punts to FERC and Private Groups to Consider Massive Subsidies for Failing Power Plants

Aug. 24, 2017

DOE Power Grid Study Acknowledges the Agency Has No Authority, Punts to FERC and Private Groups to Consider Massive Subsidies for Failing Power Plants

DOE Study Fails to Mention Significant Barriers Consumers and the Public Interest Face at Regional Transmission Organizations and FERC—Major Reforms Needed to Get Consumers at the Table

Statement of Tyson Slocum, Energy Program Director, Public Citizen

Note: On Wednesday night, the U.S. Department of Energy released a long-awaited report on the state of America’s “competitive” electricity grid – and found that even though coal and nuclear are failing and consumers are using renewables more than ever, anti-consumer, pro-industry regulators should decide which companies get bailouts.

The long-delayed U.S. Department of Energy (DOE) study on the state of the two-thirds of America’s “competitive” electricity grid landed last night with an underwhelming thud. The report says nothing about the major energy threats posed by climate change and notes that nuclear and coal are failing, largely because of natural gas, renewables and flat demand – but concludes that the Federal Energy Regulatory Commission (FERC) and private regional transmission groups get to decide which industry gets ratepayer bailouts.

The study acknowledges that economic problems facing certain power sources, such as nuclear and coal, are the result of fracked natural gas, which is cheaper; the rapid deployment of cost-competitive renewable energy; and flatlined power demand. In addition, the report notes that renewable energy has become so inexpensive and pervasive that in some markets, such as California and Texas, it is outcompeting even natural gas. The era of cheap renewables is a great thing for consumers, for reliability and for the climate.

The study fails to support U.S. Secretary of Energy Rick Perry’s evidence-free claims that power plants are failing because renewables are soaring. Sec. Perry sought to show that renewable energy is undermining grid reliability and that coal, gas and nuclear plants should get bailouts. But reliability has only improved as more renewables have come online, and studies project we will have no reliability problem as we shift toward more renewable power. In other words, the facts got in the way of Perry’s agenda.

At least in part. One significant fact-free zone remains. The study says nothing about the greatest threats to reliability: extreme weather, heat and sea-level rise from climate change. If the DOE is concerned about grid reliability, it should start there.

But, as Public Citizen has been pointing out for months, the DOE has very limited authority to act on these matters. That’s why the report’s recommendations, tepid as they are, punt to FERC.

FERC has handed sweeping authority to private organizations called Regional Transmission Organizations (RTOs), which are dominated by generators and utilities. Consumers should be in the driver’s seat when it comes to making decisions about their energy systems, but RTOs do not even give them a meaningful seat at the table.

For example, America’s largest RTO, PJM, forbids any public interest groups, such as Public Citizen, from voting on policies. As a result, the public interest is actively discriminated against when it comes to weighing in at the RTOs on significant energy policy questions – including the DOE’s recommendations. And it has been 535 days since FERC has declined to act on Public Citizen’s rulemaking petition (in Docket RM16-9) to create and fund the Office of Public Participation, as required by statute.

The issues raised in the DOE report are part of an ongoing debate about whether consumers should bail out uneconomic nuclear, coal and natural gas power plants. But the forums where these issues will be decided – the private RTOs and FERC – do not allow the public to meaningfully participate.

It is good that the DOE study did not endorse Perry’s views and use false reliability concerns to justify bailouts for fossil fuel and nuclear plants. But there are other critical issues surrounding the much-needed transition to renewables, many of which will be made by the RTOs, and some by FERC. Before they consider market reforms, they must first cure their governance and transparency problems.