The Energy Markets Podcast

Josiah Neeley, the Austin-based research fellow and Texas director with the libertarian-leaning R Street Institute, discusses a recent letter that the think tank and some 30 other interest groups sent to Energy Secretary Jennifer Granholm urging that DOE, when it is allocating funding under the Inflation Reduction Act and the infrastructure bill, to take into account areas of the country that have not yet adopted a regional transmission organization and organized competitive wholesale power market. He also discusses the debate in Texas about whether some kind of capacity construct should be adopted for ERCOT's energy-only power market. The PUC is expected to address the matter soon. State lawmakers' concerns about the regulatory commission potentially altering the energy-only market structure could become fraught as the biennial Legislature convenes soon. And on top of that, the PUC is up for Sunshine Act review under state law. "There's definitely going to be a lot of sparks flying related to that and I'm not enough of a prognosticator to tell you exactly what's going to happen. Will the energy-only market still exist at the end of that process? Will the market still exist? Who knows? But it's certainly something that there's been a lot of pressure, pro and con, of all these different options," Neeley said.Support the show

California ISO's Chief Operating Officer, Mark Rothleder, details a new study finding that an enhanced day-ahead market, or EDAM, encompassing all 38 balancing authorities in the West, would provide billions of dollars in economic savings for consumers. But EDAM is not a Regional Transmission Organization. Utilities would still control their grid systems. The construct lacks the independent grid oversight of an RTO. But Rothleder sees the enhanced market structure as the beginning of an incremental process that may, one day, bring the sprawling interconnect together under an RTO construct. Or maybe not. That would be okay, he says.But there are active discussions among a range of parties about some form of a regional RTO, he notes. "All these ... different forms of regional opportunities ... are being discussed, and not being pushed by the regulators or the FERC. These conversations are organically happening because the utilities and the regions are seeing the changing system conditions and the need for broader collaboration as a means to enhance reliability, but also unlock, really, the benefits, the economic benefits as the system transitions."Support the show

The California Solar and Stage Association's Bernadette Del Chiaro discusses the California Public Utilities Commission's pending decision on net metering and her view that granting utilities' request to ratchet back net metering compensation is a threat to the vibrant growth California has experienced recently in solar-plus-storage adoption. She describes the CPUC's pending proposal as part of a concerted, nationwide campaign to limit rooftop solar net metering, which the Edison Electric Institute described 10 years ago as an existential threat to the utility industry. The industry has employed an army of lobbyists and consultants using "bogus PR and bogus math" to convince state lawmakers to limit net-metering compensation for small consumers, she says.Support the show

Rep. Sean Casten, D-Ill., is undoubtedly the only member of Congress ever who has run an energy company with a business model built around energy efficiency. Here he talks about how being an advocate of pro-competitive reforms in the electric industry is "the absolute loneliest position in Washington."Support the show

Researchers Matthew Kahn and Bhaskar Krishnamachari, respectively an economist and electrical engineer at the University of Southern California, discuss their recent commentary calling for greater dynamic pricing in the electric industry. By reducing peak electricity demand, more responsive demand can eliminate the need for new fossil-fuel power plants and help reduce climate-altering and other harmful emissions. They look to "experimentation" with opt-in, voluntary demand-response programs that expose electricity consumers to varying power prices to analyze and determine what best motivates them to conserve energy. They urge that Inflation Reduction Act clean-energy funding be directed to develop effective demand-response programs for all consumers, not just large industrial and commercial customers with the greatest economic incentive to reduce energy use. Artificial intelligence and machine learning tools can be developed that automatically respond to price signals on behalf of "Average Joe" electricity consumers, making decisions in response to price signals based on the wants and desires and needs of the individual customer, they say, and they urge that demand-response programs be designed with lower-income households in mind.Support the show

Diana Moss, an economist and president of the American Antitrust Institute, says the Federal Energy Regulatory Commission appears to be stepping back from the bipartisan pro-competition policies that have defined FERC's approach to regulation of the electricity and natural gas industries for the last 30 years. FERC's electricity transmission rulemaking would cement monopoly control of grid expansions needed for reliability and clean-energy purposes by allowing utilities to exercise a "right of first refusal," or ROFR, in building new transmission expansion projects. And the commission's stalled natural gas pipeline certification proceeding, which was pulled back and reissued as a proposal after landing FERC Chairman Rich Glick in hot water with Sen. Joe Manchin, D-W.Va., effectively permits "affiliate precedent" self-dealing to persist. "After 25 years of careful and largely successful efforts to weave competition principles into the oversight of energy markets, FERC’s commitment to promoting competition appears to be wavering," Moss concludes in a policy paper published on AAI's website.Support the show

LS Power Senior Vice President Sharon Segner discusses the multibillion-dollar stakes involved in the arcane dispute before the Federal Energy Regulatory Commission over ROFR, or right of first refusal. FERC has proposed to allow incumbent monopoly utilities first crack at building the vast new network of transmission lines that must be constructed in order to transition to a clean-energy grid and economy. There would be no competing bids to determine if the utility build is the least-cost option, and under monopoly regulation the utility receives the full cost of the build, plus a generous rate of return. Then when the utility build goes grossly over budget, the monopoly utility goes back to the state regulatory commission for full cost recovery plus that generous rate of return. There's no opportunity for a competitive process to determine if the utility build  is the least-cost option.Or, as Segner notes, "What FERC has teed up here is, should the clean-energy transition be a clean-energy monopoly or should it be competitive?"Segner's company is the plaintiff in one of two conflicting U.S. appeals court rulings directly addressing the concept of ROFR under FERC regulation. LS Power was rebuffed by the 8th Circuit U.S. Court of Appeals in its constitutional challenge to ROFR in Minnesota. But utility giant NextEra Energy prevailed in its challenge to ROFR in Texas, where the 5th Circuit U.S. Court of Appeals strongly supported NextEra's and LS Power's assertion that such laws are unconstitutional due to a legal principle known as the Dormant Interstate Commerce clause. The conflicting court opinions would appear to make the issue ripe for appeal to the Supreme Court with its newly dominant conservative supermajority in place.We try to unpack it all for you.Support the show

Sunnova CEO and founder John Berger details his company's microgrid business strategy and calls for policy makers to level the playing field between competitive providers and monopoly utilities, both in front of and behind the meter. Monopoly regulation is a "socialistic and communistic business model," he says, noting that "the current system is broken financially and doesn't serve consumers."Berger says Sunnova's extensive solar-plus-storage installations in Puerto Rico faired well despite the destruction of Hurricane Fiona, and allowed the company's customers to enjoy electricity and live life normally despite the island's widespread power outages. "A lot of the fears that people have about solar panels flying off and everything else are just completely, completely unfounded," he says.The 10-year extension of the investment tax credit for solar energy in the Inflation Reduction Act will provide investment certainty and lower capital costs for developers, Berger says. "Regardless of what the Federal Reserve does and interest rates do, that means that our cost of capital as an industry is going to go down. And the reason for that is investors love certainty." However, Sunnova's CEO  is critical of the Biden administration's policy emphasis on large transmission projects in the multibillion-dollar infrastructure bill, rather than promoting distributed generation and other customer-based solutions. "Individual choice is always better for society, and always leads to a faster outcome and a more efficient outcome. Cheaper, basically. And so coming in again, on a Soviet-style method and saying, well, I'm going to spend all this money, trillions of dollars, and put power lines everywhere and condemn property and all that other stuff. No, it's not the right approach at all."Support the show

Pete Quist, Deputy Research Director with Open Secrets, a nonprofit dedicated to shining a spotlight on the role of money in politics, discusses the ways utilities employ money in politics and regulation. The spending is often to preserve their monopoly protection, to protect shareholder interests at the expense of consumers, and to thwart market entry by cheaper and cleaner forms of energy needed for the transition to a clean-energy grid and clean-energy economy.Support the show

David Pomerantz of the Energy and Policy Institute and Jean Su of the Center for Biological Diversity explain the impetus behind a recent petition in which hundreds of public interest groups and other entities asked the Federal Trade Commission to investigate the monopoly electric utility industry and its efforts to preserve and enhance their monopoly status and stymy market entry by competitors and clean energy resources.Support the show