With complicated September on the Hill, heads turn to October

With Complicated September on the Hill, Heads Turn to October

We started September hopeful that a clear answer would come from the Democrats’ proposed budget and its implications for electricity consumers. As we wrote last month, The House Energy and Commerce Committee approved a $150 billion Clean Electricity Performance Program (CEPP) as part of the $3.5 trillion budget reconciliation package. That package remains high-centered over disputes over spending levels with no clear path forward as we enter October.

While there are good things for clean energy advocates in the reconciliation package, including programs to support state efforts to improve market design, they are buried in a top-down government approach that is more likely to smother competition and private sector investment than advance the transition to clean energy.

West Virginia Democratic Sen. Joe Manchin, chairman of the Energy and Natural Resources Committee, has said the carrot-and-stick approach of CEPP, which would dole out tens of millions of dollars in government grants to incentivize utilities to build more clean energy makes “no sense.”

“If we give them and pay them incentives to basically change their portfolio by 2030, reliability will the loser,” Manchin said at a committee hearing last week. “I guarantee that utilities will take every dime you want to give them, but they will not commit and basically be held accountable for liability.”

We agree with him, though probably for different reasons. Paying vertically integrated utilities to produce more clean energy is a recipe for inefficient and expensive investment in generating facilities that leave consumers holding the short end of the stick. See the recent write-up on CEPP by R Street’s Philip Rossetti. For that matter, see Votgle.

Market demand for clean energy already exists, as is evident in the growth of consumer-owned generation in the retail market. It’s threatened by a regulatory state that’s set to expand exponentially under the current budget proposal. CEPP is the antithesis of a free market. It would reward utilities for continuing to talk big but do little while sidelining private investment and consumer choice.

The transition to clean energy will not come from monopoly utilities that profit based on how much they spend – not on how well they perform. See Entergy. If Congress really wants to accelerate the transition to cleaner energy, it should invest in R&D and overhaul the current regulatory environment to reduce barriers for third-party competitors to enter the electricity markets in more states.

If CEPP remains high centered, maybe the Senate can find the space to advance better ideas that prioritize the interests of consumers. Welcome to October.

Stick close, things move fast — follow us on Twitter and see up-to-date content on our website.

Sincerely,

Robert Dillon, Executive Director

September Stories

Study Finds Competition Good for the Environment, Consumers

States with competitive electricity markets saw cheaper energy prices, more energy infrastructure investment to improve efficiency and reliability, and greater emission reductions compared to monopolies, according to a study released this week by the Pacific Research Institute.

“Residents and businesses lose out when states cling to outdated government-mandated electricity monopolies,” said Dr. Wayne Winegarden, a senior fellow at the California-based free-market think tank. “Customers in monopoly states pay higher energy prices, see less effective infrastructure investment, fewer emission reductions, and endure less reliable power systems.”

The report, aptly entitled “Affordable and Reliable,” found that competition reduces prices for consumers in the 13 states and the District of Columbia that have retail competition.

FERC Looks at the Future of Grid Services in New Report

The Federal Energy Regulatory Commission (FERC) released a report Sept. 7 on potential market design reforms to improve the operational flexibility of independent system operators and regional transmission organizations (ISOs and RTOs) as they adapt to changes in the resource mix and changes to loads brought about by the transition to renewable energy and the electrification of the economy.

The rapid growth of generation from variable resources like wind and solar, along with the shift to more consumer-owned generation like rooftop solar and the changes that bring to demand, along with the political push to greater electrification of the economy, is prompting RTOs and ISOs to look at ways to improve their flexibility to maintain reliability.

The resource fleet is changing to include higher penetrations of variable energy resources, storage, and co-located and hybrid resources. However, far more storage is needed to make variable generating sources available on-demand – or dispatchable – for system operators to fully rely on them for reliability purposes.

Hurricane Ida Exposes Entergy's Unreliable Grid While Residents Pay Price

When Hurricane Ida struck the state of Louisiana last month, nine people died because of "excessive heat during an extended power outage.” Residents like Wilma Banks, a former casino employee with cognitive heart disease and asthma, were dependent on their utility company to support them by powering their medical devices and HVAC systems during this time of need. But as days went on after the eye of the storm ripped through homes and livelihoods, power wasn’t restored.

Sadly, an investigation found that prior to the storm, Ms. Banks’ utility company, Entergy, “aggressively resisted efforts by regulators, residents and advocates to improve its infrastructure. The company's restoration of its equipment after major storms didn't prioritize the grid modernization that industry experts say could limit the scope and duration of power outages. And instead of shifting toward renewable energy, Entergy doubled down on building plants that emit greenhouse gases — the same pollution that makes hurricanes bigger and wetter.”

Perhaps most sobering is that even in a state like Louisiana, where some of the nation’s most sever and unforgiving natural disasters hit, Entergy’s building stood tall over the city when one million residents remained without power for days on end.

Read the whole investigation at NPR or an excerpt below.

The Future of the Grid: Microgrids

The lingering power outage in New Orleans and surrounding areas served by the vertically integrated power company Entergy caused by Hurricane Ida is just the latest example of the lack of resilience in much of our nation’s power systems. One way to mitigate power disruptions is to develop more microgrids – isolated generation and delivery systems that can operate independently in a limited geographic area from the traditional regional grid.

Microgrids are especially useful for maintaining power to critical infrastructure like hospitals, telecommunications, and water treatment plants. But residential homes and apartment buildings can also benefit from microgrids, typically rooftop solar and battery storage systems generating a few hundred kilowatts that can be used to power entire neighborhoods separately from the larger electricity system.