States should leave markets that don’t work for families and businesses after bad FERC decisions

Source: By Mark Kresowik, Utility Dive • Posted: Tuesday, May 5, 2020

The following is a contributed article by Mark Kresowik, Deputy Regional Director of Sierra Club’s Beyond Coal campaign.

A flurry of filings with and rulings by the Federal Energy Regulatory Commission in April have emphasized efforts to usurp state laws and bail out dirty and unnecessary power plants in the New York Independent System Operator (NY-ISO), ISO New England (ISO-NE), and PJM markets. These decisions will increase electricity costs and make it harder for families and businesses to recover from the pandemic.

The majority of FERC commissioners, appointed by President Donald Trump, have thrown concern for ratepayers, the climate crisis, and public health out the window and proposed plans that will make the already flawed markets even worse. It is time for states to leave markets that don’t work for their consumers.

ISO-NE delivered one of the latest blows to the pocketbooks of families and businesses with its Energy Security Initiative filing on April 15, a massive overreaction to an imaginary gas shortage problem from ISO-NE’s own deeply flawed study. The fact is that more clean energy helps winter reliability, not subsidizing dirty power plants.

That filing was immediately followed on April 16 by FERC’s “just plain garbage” rejection of rehearing requests on its decision to increase consumer costs by billions of dollars in approving PJM’s expansion of the Minimum Offer Price Rule (MOPR) to limit clean energy’s participation in the capacity market. Even PJM said that the original decision would have “paradoxically unintended consequences” by undermining support for the markets FERC purported to be saving.

That very same day, the FERC majority similarly denied rehearing of PJM’s capacity market demand curve, which in tandem with PJM’s perennially wrong forecasts has led to families and businesses paying way more than they need to.

Despite all of those horrible decisions, the FERC majority still managed to miss its now more than two year old appointment to decide rehearing requests on ISO-NE’s failed attempt to fix its own manufactured MOPR problem. Taken together, all of these decisions point in one direction: more money from families and businesses, who want clean, affordable and reliable power, going to dirty and unnecessary power plants

This litany of failure for families and businesses is the result of coal and gas companies wanting more money, with FERC and market operators doing their bidding with a lethal combination of arrogance and dubious legal reasoning. For nearly a decade, ISO-NE CEO Gordon van Welie has been claiming that the winter reliability sky is falling (it isn’t), yet every non-solution ISO-NE has actually moved forward has and will increase consumer payments to coal, oil and gas, instead of the clean energy that actually delivers for customers.

On March 21, 2016, a group of power plant owners filed their complaint about profits that led to PJM’s MOPR-madness. Stakeholders in both regions have repeatedly refused to support PJM and ISO-NE’s MOPR or fuel insecurity proposals, but the market operators advance every one of their flawed ideas past those objections to the ready desks of the FERC majority.

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The Massachusetts Supreme Judicial Court saved New England ratepayers from one costly gas pipeline disaster pushed by ISO-NE, but the states have no jurisdiction over market operators or FERC. PJM and ISO-NE’s repeated refusal to accommodate state clean energy policies, failure to base decisions on objective analysis, or even abide by the votes of their own stakeholders have demonstrated that governance structures are fundamentally broken.

States have only three choices: continue to let FERC and market operators run roughshod over families and businesses struggling to make ends meet, put all their hope in courts to overturn these disastrous orders down the road, or exit the markets and support local clean energy resources.

The last option is the best bet for customers, and exiting the markets doesn’t have to be permanent. When governed by rules that treat consumers fairly and respect state authority, markets can bring a lot of benefit. Reentering the markets can be reconsidered when a new FERC majority is ready to care at all about consumers instead of political donors.

The key is to start the exit groundwork now, before this plethora of horrid decisions hits pocketbooks. The earlier states start the process of leaving, the less pain families, businesses and our climate will have to suffer. ​​