Free-market group urges FERC to defend grid from companies looking to game the system
The free-market think tank R Street Institute is looking to defend the federally overseen electricity markets from coal and nuclear power plant owners looking for incentives to continue operating in a market dominated by low-cost natural gas.
R Street described the effort in a lengthy letter sent Wednesday to Kevin McIntyre, the Republican chairman of the Federal Energy Regulatory Commission, the nation’s top grid watchdog. The group is urging the chairman to be vigilant in defending the grid against interests looking to resurrect something akin to Energy Secretary Rick Perry’s grid plan to provide market incentives for coal and nuclear power plants.
FERC had unanimously rejected the Perry plan earlier in the year, while simultaneously launching an effort to better rate the resilience of the grid in the wake of the deep freeze this winter when coal became the backbone of the grid.
“Initial attempts by the Energy Department misframed resilience, and we applaud the Commission’s effort to redirect the discussion in a productive direction,” the letter reads.
In the letter, obtained by the Washington Examiner, the group explains the need for McIntyre not to let coal, nuclear, or any other power plant owners, dominate the debate over what constitutes a resilient grid.
“Resilience as framed by the Energy Department certainly served as a conduit for rent-seeking from the coal and nuclear industries, however, other technology providers and resource owners may use it to argue their technology is better and should be favored in the rules,” said Devin Hartman, R Street’s electricity policy manager, who drafted the letter. “Thus, we need to make sure the resilience initiative doesn’t pick winners and losers.”
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But Devin doesn’t want McIntyre to be swayed by anything other than clear market signals to keep the grid running while maintaining low prices for consumers.
“Given the degree of political interest in the issue, we are concerned that rent-seeking interests may coopt the resilience narrative,” the letter reads. “In particular, some resilience discussions in states and [the regional grid operator] stakeholder processes appear motivated to placate parochial interests.”
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But Devin doesn’t want McIntyre to be swayed by anything other than clear market signals to keep the grid running while maintaining low prices for consumers.
“Given the degree of political interest in the issue, we are concerned that rent-seeking interests may coopt the resilience narrative,” the letter reads. “In particular, some resilience discussions in states and [the regional grid operator] stakeholder processes appear motivated to placate parochial interests.”
[…]
“I think it’s quite telling that the most enthusiastic industry backers of resilience reforms are suppliers that see increased profit opportunities, while many sophisticated consumers groups remain weary of potentially excessive costs,” Hartman said. “A resilience initiative should have the buy-in of customers and ideally empower them to have more choices that reflect their willingness to pay for reliable and resilient electric service.”
