Dems Blast FERC Renewables Order, Saying It Would Curb States’ Rights, Drive Up Prices

Jon Hurdle | January 30, 2020 | Energy & Environment
FERC chairman due to respond ‘soon’; critics say measure will hinder adoption of clean fuels
Credit: Myriam Zilles from Pixabay
Democratic House members said FERC’s order will result in higher prices for consumers who want to buy power generated with renewables.

Thirty-six U.S. House Democrats on Wednesday attacked a new federal order on renewable fuels that they said would set back the adoption of clean fuels, curb states’ rights to choose their own energy mix, and raise costs for consumers.

The lawmakers, including New Jersey’s Bonnie Watson Coleman, sent a letter to the Federal Energy Regulatory Commission protesting a Dec. 19 order that directs PJM, the country’s biggest grid operator, to include electricity from state-subsidized renewable sources in its “capacity market,” a move designed to bring the price of clean fuels into line with those of fossil fuels.

The rule, the Democrats said, would remove the rights of New Jersey and other states to determine what combination of energy sources to use, and would conflict with the policies of most states in the PJM region that require utilities to obtain some of their energy needs from zero-carbon sources including wind, solar and nuclear power.

They said the order will result in higher prices for consumers who want to buy power generated with renewables. The measure will also create uncertainty for large energy users who have already committed to sourcing some of their power from renewable sources to meet state policy targets.

“It creates a direct conflict between wholesale power markets and state policy goals,” the letter said. “This needless conflict will inevitably cause states to reconsider the benefits of wholesale markets, placing decades of work developing competitive deregulated markets at risk.”

The FERC order subjects nearly all energy sources to a minimum bid requirement under its Minimum Offer Price Rule, the letter said. The rule sets a minimum price for power from a new resource to determine whether it’s competitive, and to stop market participants artificially lowering auction prices by submitting uncompetitive offers, PJM said.

“In effect, this broad definition appears to sweep in nearly all state policies developed to date to encourage deployment of energy technologies, namely renewable portfolio standards, energy efficiency resource standards, renewable energy certificate markets, clean energy standards, and any state-legislated or mandated tax incentives that are in place for any power generation technology,” said the signatories.

‘Level playing field’

When it released the order, FERC said it is designed to meet the regulator’s statutory duty to ensure competitive markets, and create a “level playing field” for all resources.

A FERC spokeswoman said its Republican chairman, Neil Chatterjee, would respond to the Democrats’ letter “soon” but not on Wednesday. Chatterjee is an appointee of President Donald Trump, who advocates for fossil fuels, and has rejected the 196-nation Paris Climate Accord to curb climate change by cutting carbon emissions.

PJM, which runs the electric grid in 13 states — including New Jersey — and the District of Columbia, declined to comment on the letter but drew attention to its objections to the order in a Jan. 21 request to FERC for a rehearing.

The grid operator said the order would “disrupt a careful balance” of accommodating state energy policy directives while maintaining the integrity of the PJM capacity market, and it urged the agency to reconsider its order.

“PJM strongly urges the Commission to recognize that there needs to be a balancing of state policy objectives and federal interests in efficient market design in order to provide the greatest overall economic efficiency to consumers,” it said.

The order would force up prices paid by utilities for power from subsidized nuclear plants in New Jersey and Illinois; on renewable resources built to meet state targets in New Jersey, Maryland and Pennsylvania, and on nuclear and coal plants eligible to receive support in Ohio, the Democrats said in their letter.

They said the order effectively subjects any new resource to the rule.

When the order was issued, its many critics included the New Jersey Board of Public Utilities, which said the measure showed FERC favoring fossil fuels over renewables, and could make it harder for states to affordably address climate change through the competitive markets.