The Energy Markets Podcast

In this episode we continue our consideration of what Bill Massey in our first episode this season called "the battle of the statistics" between monopoly and competition advocates. We talk with Michael Giberson, an economist and senior fellow for energy with the R Street Institute, who notes the importance of taking statistics into proper context when attempting to contrast between monopoly utility regulation and competitive markets – particularly the need to account for the impact of inflation when looking at changes in electricity prices over time.Support the show

Since the dawn of retail energy competition a quarter century ago, various factions pro and con have engaged in a "battle of the statistics" (as former FERC Commissioner Bill Massey termed it in Episode 1 of this season) regarding the benefits that consumers – particularly residential customers – obtain from competition in retail electricity service. Mostly, these statistical arguments have centered around price savings that residential consumers may or may not have obtained from having a competitive choice in energy suppliers.In this episode, we hear from Constellation Energy's Rich Spilky, who on behalf of the Retail Energy Supply Association breaks down for us the body of RESA-sponsored work by the late former Illinois utility regulator Phil O'Connor that objectively sought to identify the consumer benefits of customer choice over time, with the price data adjusted for inflation. Spilky assisted O'Connor in these data analyses, which sought to objectively identify which states had effective retail energy competition, and to use federal government statistics to compare the performance of those retail choice states against that of states that retained traditional monopoly price regulation.The results have been compelling. For both studies that Spilky assisted O'Connor in preparing – Restructuring Recharged and The Great Divergence – as well as in the analyses that Spilky has conducted independently since, this objective methodology has shown that electricity consumers in the 14 jurisdictions with effective customer choice have generally experienced downward price trends while their counterparts without choice in monopoly states have generally experienced upward price trends. The analyses clearly show "there's something good going on in the competitive states, pricewise and cost-containmentwise, that's not happening in the monopoly states," Spilky says.  "I think it's remarkable."Support the show

The Biden administration in January announced a pause in reviewing export permits for liquefied natural gas (LNG) in order to better understand the impacts that the United States' world-leading LNG exports will have on domestic natural gas prices, climate change, and environmental equity. Could the pause threaten the U.S.'s position as the world's top LNG supplier? Charlie Riedl, executive director of the Center for LNG, speaks to the the national security implications of the administration's pause – U.S. LNG was instrumental in Europe's pivot away from Russian gas in the wake of the Ukraine invasion – and says the regulatory action has prompted concerns among European allies and buyers regarding the reliability of the United States as an energy supplier. The economic and environmental impacts of LNG exports have been studied and restudied, says Riedl, who sees election-year politics prompting the announced review.  Given today's record-low prices for natural gas in the U.S. and the projected impact of the Environmental Protection Agency's recently finalized methane emissions-monitoring rules, the outcome of the new review should be a net positive for the industry, he suggests.Support the show

The debate over the benefits of competition for energy consumers has persisted since the advent of retail competition for electricity and natural gas more than two decades ago. Consumers are stuck in a limbo between traditional monopoly regulation and competitive choice because the movement to deregulate energy pricing (much as most other formerly price-regulated industries were deregulated decades ago) has stalled in the wake of the catastrophic collapse of California's disastrously ill-designed market at the turn of the century.Ever since, competition advocates have sought to expand the dozen or more states where competitive energy supply is available to consumers, but mostly have been thwarted in the face of monopoly utilities' deep-pocketed opposition.  Today, emboldened monopoly utility interests, along with well-meaning but misguided consumer advocates, are supporting legislation in at least two states – Maryland and Massachusetts – that would effectively end competitive retail energy supply choices for residential customers.Travis Kavulla,  vice president of regulatory affairs at NRG Energy, is on the front lines of the battle by competitive energy suppliers to preserve customer choice for residential consumers. The former Montana utility regulator discusses the headwinds in states like Maryland and Massachusetts, but also the opportunities to expand retail energy choice in other states – such as South Carolina and Louisiana – where elected officials seek to reign in the increasingly higher costs their constituents pay to monopoly utility suppliers for electricity and natural gas.Support the show

Our discussion continues with David Doniger, Natural Resources Defense Council senior attorney, who notes that flexible market-based emissions cap-and-trade programs have been applied somewhat ubiquitously to address a range of environmental issues, from eliminating lead in gasoline, to combatting acid rain, to phasing out ozone-depleting chemicals – even to allocating catch limits for herring, an issue incidentally connected to cases now pending before the Supreme Court challenging the long-standing legal precedent known as the Chevron doctrine.But Congress and the Supreme Court have rejected attempts to apply this flexible market-based approach to controlling greenhouse gas emissions. Today, few in Washington even attempt to suggest emissions cap-and-trade as a response to greenhouse warming, and instead call for Congress to put a "price" on carbon. But Doniger notes that putting a price on carbon involves establishing a new tax, and he doesn't see a carbon tax gaining traction among Republicans in Congress."I don't think we're going to see carbon taxes because the one whole party has become the anti-tax party. It's a dead letter to one whole party," Doniger says. But he does see merit to cap-and trade, and points to bipartisan congressional agreement in 2017 to employ cap-and-trade in phasing down ozone-depleting HFCs. "There is life in the old cap-and-trade design yet," Doniger says. "There are variations of emissions trading that we continue to promote because the flexibility reduces costs for industry and therefore lets them reach farther for the same total regulatory costs."Support the show

Who better to discuss the ramifications of the Supreme Court's apparent path toward striking down the long-standing legal precedent known as the Chevron doctrine than the lawyer who argued the original case 40 years ago?Natural Resources Defense Council Senior Attorney David Doniger is a lion of the environmental movement who has been instrumental in the environmental group's efforts to rein in air pollution from fossil fuels and emissions of ozone-depleting chemicals. He has been a fixture at the NRDC since 1978, except for the years during the Clinton administration when he played key environmental roles at both the White House and the Environmental Protection Agency.Doniger discusses recent oral arguments before the Supreme Court  in a case challenging the Chevron doctrine and the ramifications of unwinding the regulatory deference legal principle. We also discuss the history of efforts to regulate carbon emissions that contribute to climate change, and how a key Supreme Court decision blocked the government from adopting economically efficient solutions and limits the Environmental Protection Agency to promoting technology-based solutions in a rulemaking expected to be finalized in the coming months.Support the show

Energy lawyer and law school professor William Massey, at 10 years the longest-serving commissioner ever at the Federal Energy Regulatory Commission, discusses the vast body of legal precedent finding FERC has expansive authority under the Federal Power Act and Natural Gas Act, and reviews pending cases before the Supreme Court that may test whether this expansive view of FERC's authority will continue under the court's new Major Questions Doctrine."The courts have said FERC's authority is at its zenith when it comes to remedying undue discrimination. And FERC has remembered that and bases many of its policy choices on finding undue discrimination in either natural gas or electricity markets," Massey says. "We'll have to wait and see whether this Major Questions Doctrine, as it plays out over the next few years, whether it limits FERC's authority in certain ways."Massey also speaks to FERC's early days restructuring natural gas and electricity markets in the 1990s, the vast economic benefits that consumers have accrued as a result, and suggests that opening up the electricity sector to greater competitive forces will help policy makers bring about the clean-energy transition in response to the climate change threat at least cost to consumers.Support the show

The world's burgeoning billions have been kept fed thanks to the "Green Revolution" of the 20th century, which featured new hybridized crops with enhanced yields. Often deemed a miracle of science, it was also made possible by energy-intensive industrial fertilizers. Fritz Haber and Carl Bosch were each awarded the Nobel Prize for their contributions to the widely used processes for synthesizing ammonia from nitrogen taken from ambient air and hydrogen derived from fossil fuels. These ammonia-based nitrogen fertilizers, along with mined fertilizers, today help to feed the world, something Thomas Robert Malthus never envisioned in his 18th century writings warning of overpopulation. Today we are concerned with another green revolution that seeks to end the use of fossil fuels, which when burned create emissions that are dangerously warming the atmosphere and creating the need for a second agricultural revolution to ensure the world's billions can still be fed in the face of drastic climatic extremes. So as we look to decarbonize the world's economy and phase out the use of fossil fuels, what is the fertilizer industry doing to green its highly fossil fuel-dependent industrial and mining processes?We talk with Alzbeta Klein, CEO of the International Fertilizer Association, freshly returned from COP28 in Dubai, where for the first time the world's nations agreed to the need to phase out fossil fuels to temper the runaway climate change we are experiencing. "Food is energy, and we need to understand that connection," Klein says. "We need to understand the transition for the energy markets, and we need to understand the transition for the food market because the two go hand-in-hand."We also hear from Hiro Iwanaga of Talus Renewables, a nitrogen fertilizer startup at the forefront of using photovoltaics to crack hydrogen from water, rather than fossil fuels. Also freshly returned from Dubai, Iwanaga talks about his company's demonstration project now under way in Kenya, and the company's next projects here in the United States. "The green hydrogen tax credit that was passed as part of the Inflation Reduction Act makes our product cost-competitive," he explains.Also, Brandon Kail of Rocky Mountain BioAg speaks to his company's approach employing soil microbes as the foundation of a non-fossil fuel-based approach to plant nutrition, and Divina Gracia P. Rodriguez of the Norwegian Institute of Bioeconomy Research tells us about an EU-funded project in Ethiopia she is spearheading that seeks to address barriers to the adoption of human urine-based fertilizers.Support the show

Matthew Hunter was a power trader in the Western market in 2000, when California's poorly designed and managed electricity market imploded costing consumers hundreds of millions of dollars. After that, he spent much of his career at the Federal Energy Regulatory Commission and the Commodities Futures Trading Commission. He gives us a deep dive into hedging – futures markets, derivatives and swaps – and how these complex price-risk mechanisms don't necessarily protect consumers in the end.A leading reason that California's market failed so spectacularly was because state law prohibited the state's Big Three utilities from hedging their price risk. At the height of the resulting energy and financial crisis, California officials rebuffed FERC's recommendations to allow the utilities to hedge their spot-market risk, and instead intervened in the market to purchase long-term power at crisis-inflated costs, saddling the state's consumers with those costs for the last two decades.Fast-forward to the extreme weather-induced collapse of the Texas market in 2021, and Hunter predicts that, as in California, consumers will be again stuck with the tab. Hedging instruments are generally pegged to a price index for the commodity, and Hunter asserts that, in Texas, unreasonably high natural gas index prices translated to the price indices for electricity, contributing to the dramatic escalation in electricity prices.  Hunter objects to consumers being the backstop for financial losses incurred by speculators in the market."If you go from a nominally and totally reasonable . . . gas price to an unreasonable gas price that then transfers itself to an unreasonable power price through contract terms of index-to-index, then it seems perfectly reasonable to roll back the index gas price to roll back the index power price to something that is reasonable," Hunter asserts. "I am not saying that it shouldn't be a scarcity value (but) there's no reason for gas even under scarcity conditions to be twelve hundred dollars per MMBtu or a thousand dollars."Support the show

State Senator Tom Davis of South Carolina is a rare breed in politics today. At a time when no other state is actively considering competitive reforms to their traditionally monopoly-regulated utility sectors, and many politicians in states already benefiting from competition in electricity are promoting anticompetitive measures, he is leading the push for his state's consumers and economy to benefit from greater customer choice and competition among electricity providers. The Republican lawmaker discusses how the multibillion-dollar V.C. Summer nuclear debacle in South Carolina in 2017 jolted him and other Palmetto state lawmakers to take a deep dive into utility regulation. He provides specific details of the electricity reform legislative proposal he will unveil Nov. 30 for consideration by the Legislature during next year's session. A political pragmatist, Davis looks to move the entrenched monopoly steamship by degrees."The ideal at the end of the day is going to be a system where providers have to compete and the ones that can generate power most efficiently and most cheaply and most reliably win, and that consumers have choices on their side," Davis says. But he suggests it's not politically realistic to think the ideal outcome can be accomplished in one fell swoop."I think it's important for us to move incrementally" in pursuit of the ideal during next year's legislative session, Davis says. Calling politics "the art of the possible," he described a legislative process that ponders, "What can we get across the finish line? What can we get out of subcommittee and full committee and if it gets to the floor, what can we do to overcome anybody who wants to object or to filibuster?"With 2024 being an election year, Davis says he is hitting the ground running to  accomplish legislative objectives before campaigning and politics become a distraction. "2024 is going to be an incredibly busy year from an electoral perspective. And so that's why it's important right now . . . to focus on some of these issues before we all get swept up in the politics of campaigns and elections," he says. "It's important to dial our energy into, and our focus into, what are some important public policy reforms to accomplish in 2024. That's why I'm placing so much emphasis on this right now because I do think there's a window of opportunity for us."Regardless of how far along the continuum to a competitive ideal the legislative process allows for next year, it won't be the endgame, Davis suggests, promising that subsequent legislative sessions will see further efforts to reform the state's electricity sector to produce better outcomes for consumers by moving the state ever further along the continuum to a competitive ideal. "It's absolutely essential that we bring to bear on that system of power generation more market forces, more competition, because you're not going to get the best technologies, you're not going to get the lowest costs, you're not going to move toward what I think is a better future if you don't have that dynamic working in that space."Support the show

More than two decades ago when the Federal Energy Regulatory Commission sought to put large regional wholesale power markets in place nationally, Western states were a hotbed of opposition to the since-abandoned goal.  But today there are two competing proposals for competitive day-ahead wholesale power markets as the region has come to recognize that market-based regionalization helps cost-effectively and reliably integrate increasing amounts of variable renewable energy resources.The Western Power Trading Forum's Scott Miller breaks those down for us, and explains why he's optimistic that the two nascent efforts under way today will one day result in establishing a Western regional transmission organization, or RTO."The desire to get to an RTO with the simplicity of a single tariff is something that I think will manifest itself as people get some experience," Miller says. "I'm betting on the fact that once people get some experience in this day-head market, they're going to want to get to the single tariff, with probably some Western twists that are different." Support the show

UK-based Octopus Energy has seen extraordinary growth since launched in 2015 by fund-management firm Octopus Group. It's heavily invested in renewable energy in the UK and elsewhere, and it has retail energy supply operations in Australia, Germany, Italy, Japan and New Zealand, with its U.S. arm headquartered in Houston. As its name would suggest, Octopus has its tentacles everywhere all at once in competitive energy supply, it would seem. And that reach promises to extend even further with the company's Kraken software platform, which it doesn't keep to itself but licenses to other retail energy providers.The fact that the company chose Texas as the first energy market in the U.S. to invest in serves as a strong counterpoint to baseless criticisms of the ERCOT market in the wake of the deadly Winter Storm Uri outage. It's simple: Texas, with its wholesale power market unencumbered by the price caps hobbling competitive eletricity markets in the Northeast, provides the price signals Octopus needs to actively engage its residential customers in aggregating demand response and distributed solar energy resources, and shares the proceeds the company earns in the wholesale market with its participating retail customers. Its recent pilot during the month of August saw participants earning, on average, 20 cents per kilowatt-hour on their self-produced renewable energy they, through Octopus, sold back into the grid rather than consume during critical events in ERCOT, or roughly twice what might have been available via net metering.  Some customers made nearly $1,000 that month for arbitraging their energy use and "exporting" their clean energy to the grid, says Octopus Energy US CEO Michael Lee."What we're really doing is really aligning customers to say, yes, you want to produce your power and you want to sell it back," he says. "Let's move on beyond this product called net metering, and let's align the financial outcomes to the customers." It's an example of what Lee describes as moving beyond the "Retail 1.0" offered by most energy suppliers today to a much more consumer-centric "Retail 2.0.""Usually, net metering is a one-for-one credit. But because we were able to find financial incentives they were getting more than one-for-one and some people were getting a 20-to-one credit because they were getting $1 or $2 a kilowatt-hour for their exports for the entire month of August," Lee says of the recently concluded pilot. "My personal opinion is that Retail 1.0 has quite underserved the market. There's a huge opportunity to completely rethink what retail energy is going forward and what it looks like for customers and how that benefits all the players, the grid, the utilities – everyone."Support the show

Electric utility monopolies have captured headlines in recent years by sparking catastrophic wildfires and fomenting public corruption scandals in several states. "There are probably other things like this going on we just haven't found out about," remarks John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance. We spoke with him about his recent article in the American Prospect, How private monopolies fuel climate disaster and public corruption. Farrell speaks to how the investor-owned utility's interests in earning a return for its shareholders typically don't align with the interests of its customers or the environment. "You have concentrated ownership and power over the system in a way that's not terribly accountable to people," Farrell observes. Farrell advocates municipalization, seeing publicly owned monopolies as an improvement over for-profit utility monopolies, particularly when it comes to cost of capital. But he also advocates for greater competition in electricity, and for adopting measures such as independent distribution system management and quarantining the monopoly from competitive markets. "When you create a competitive market, it really needs to be truly competitive. And the idea of letting the monopoly continue to participate is problematic," he says.Support the show

The flood of financial headlines on the offshore wind industry have been quite bearish in recent months. The industry has been buffetted by strong post-COVID headwinds – dramatic inflationary pressures and supply chain problems – that have rendered several Atlantic coast projects uneconomic. After writing down its assets by $2.3 billion, Orsted's stock has been punished by the market as the company threatens to walk away from uneconomic projects unless their terms can be renegotiated to reflect changed economic circumstances. Offering another barometer of the deep bear market for offshore wind were recent lease auctions in the U.S. and UK, which received little to no interest.Putting this all into perspective for us is Kris Ohleth, executive director at the Special Initiative for Offshore Wind. While acknowledging the near- and medium-term challenges churning the waters for the industry, Ohleth remains bullish on the long-term prospects for offshore wind in the United States:"If you look at the decarbonization and clean-energy goals that we have for this nation, there is literally and absolutely no way to meet them without offshore wind. It is a technology of scale that is the only one, in fact, available for coastal states – for many coastal states in the United States – to meet their state and the overall national clean-energy targets that we need, especially as we continue to electrify our transportation systems and our building units. So there's a real demand for it. And I believe that the market will recorrect and we will make additional incremental progress towards commercialization in the United States in the next decade."Support the show

The Environmental Protection Agency's new proposed rules to significantly crack down on carbon emissions from fossil fuel-fired power plants, as published, promises to aggravate growing power grid reliability concerns, EPSA president and CEO Todd Snitchler suggests.  "I think we need to be thinking a little more holistically and not siloed in the rules in order for us to make sure that we can achieve the outcomes that policymakers want us to achieve, while still ensuring system reliability. That has to be first and foremost," Snitchler says.More broadly on grid-reliability concerns, Snitchler rejects assertions by some that competitive markets and RTOs are particularly vulnerable to outages and reliability issues. "I know that there are a number of views about what the right model is," he says, but he notes there are increasing reliability concerns in monopoly-regulated states as well as the clean-energy transition ratchets up. "I don't think there's a one-size-fits-all and we should just copy a different market because it allows vertically integrated utilities to carry the day because, even in that example, they're not able to get done, I think, some of the things that maybe some advocates would say that they can."While there's little expectation the industry concerns will benefit anytime soon from a historically fractured Congress, Snitchler suggests lawmakers missed a key opportunity for bipartisan agreement during a recent debate over whether to include energy project permitting reforms in the Inflation Reduction Act. "There was a time when energy wasn't quite so partisan. I think we would do well to try to think about constituents first," the former Ohio lawmaker and utility regulator says. "If you need to have transmission, and we all agree that we're going to need to have natural gas pipelines in order to power the system, those should go together. And that's where I think room for compromise would exist. That would be a best-case scenario in Washington because both sides would have something to gain. And they would be able to take that home and say, look, I won. And it would, in the end, result in a more reliable, more efficient power system."Support the show

Commissioner Mark Christie of the Federal Energy Regulatory Commission has been a prominent advocate of the need to overhaul the competitive market design at the heart of the regional wholesale power markets that have evolved in the U.S. over the past 25 years ("It's time to reconsider single-clearing price mechanisms in U.S. energy markets", Energy Law Journal, May 2, 2023). The fossil fuel-fired "dispatchable" generation units that Christie sees as crucial to ensuring power grid reliability are retiring faster than passively fueled renewable energy resources can be brought on to replace them. In our discussion, Commissioner Christie makes clear that his top target for reform is capacity markets, not the security-constrained economic dispatch model employing locational marginal pricing, or LMP, in real-time and day-ahead spot markets. LMP is the central design element of all state and regional competitive wholesale power markets in the U.S."I think in the real-time energy markets, the real-time energy markets and the use of LMP has saved consumers money by getting economic dispatch, by getting the least-cost unit dispatched. So I think in the real-time energy markets, I think there has been consumer savings," Christie says. "There's many functions to RTOs and I think that the most important function of all, and the one I think where they've provided undisputed benefits, has been to provide a larger balancing authority," he says, adding: "Probably the biggest single benefit of RTOs has been that they've provided a regional system operator, which I think has been of tremendous benefit to reliability and also, I think, to cost savings because they can dispatch cheaper resources across a broader territory."But Christie, an ardent states rights advocate, does not see FERC's role as ensuring these consumer-friendly regional power markets are ultimately in place everywhere, which former FERC Chairman Pat Wood attempted to do 20 years ago. "How you regulate your utilities is really an individual state decision" to make, and not FERC's, he says, calling Wood's Standard Market Design "massive overreach and an invasion of basically state retail authority."Nevertheless, Christie says, "I don't think that, frankly, the real-time energy markets, which use LMP, what's called locational marginal pricing, are really the first place we ought to be concerned. I think the real concern and we ought to focus on first is in the capacity markets," Christie elaborated, asserting that capacity markets should be replaced with utility self-supply programs that incorporate integrated resource planning by state regulators. IRP is a central element of standard monopoly utility regulation."I think an IRP process – it gets you the best mix of a balanced holistic approach where you can balance all the different resources that you need and try to get them at the best cost to consumers, which is what the goal ought to be," Christie says. "Everything we do as regulators in the energy area has got to be about what's good for consumers. We have to look at what is going to get consumers reliable power at the least cost. And I think everything we do, we've got to be asking ourselves, is this the best thing for consumers?"Support the show

Massachusetts is actively considering Gov. Maura Healey's longstanding demand to end competitive retail energy sales to residential customers. As part of this debate in Massachusetts and elsewhere, the Retail Energy Advancement League commissioned the Analysis Group's Paul Hibbard, a former Massachusetts utility regulator,  to provide a comprehensive examination of retail energy choice. We talk with the report's author as well as Chris Ercoli, REAL's president and CEO.Support the show

There's something like a couple dozen proposals now for development of small modular reactors (SMRs), widely seen as the future of nuclear power as a participant in the clean-energy transition. Publicly traded NuScale* is at the vanguard of this trend. We spoke with the Nuclear Energy Institute's Matt Crozat about the prospects for SMRs and nuclear's role in the clean-energy transition at a time when we thought the first of Georgia Power's new Vogtle nuclear power units would have already been brought online. But a "degraded hydrogen seal" was only the latest delay for the $35 billion expansion project funded by ratepayers captive to a monopoly utility supplier. We also spoke at a time when Putin's invasion of Ukraine became even more fraught amid reports Russian troops may have planted explosives at the Zaporizhzhia nuclear plant they've commandeered. Crozat sees the prospect of new nuclear technologies and the growing acceptance among the public and policy makers of nuclear's critical role in the clean-energy transition as reasons for optimism on nuclear's future."We have as a starting point all of these utilities that have commitments to be carbon-free by mid-century. And that's creating a lot of pressure looking for technologies that can help bring low-carbon solutions into the portfolio, which also requires making sure you have the ability to provide the reliability and resilience to the grid that we need to have that be successful. And nuclear is standing out as one of the possible technologies that can do a lot of the roles alongside of wind and solar and batteries and these others, but it's really becoming something – it needs something that looks like nuclear to make the system work," Crozat says. "A lot of people are coming to this conclusion. At the same moment, we have new technologies that are offering nuclear in different packages than before. And it's really changing the calculus as people are approaching this as a possibility."Our conversation touches on new nuclear, the apparent lack of investor interest in NuScale despite its regulatory progress, carbon taxes, nuclear waste disposal, competitive markets versus monopoly regulation, exporting U.S. nuclear technology, and the prospects for sabotage at Ukraine's Zaporizhzhia plant. As for Zaporizhzhia, Crozat doubts Russia will sabotage the plant: "Russia itself has a very long-term strategic interest in having nuclear energy being a viable strategic outcome. They want to sell reactors, too." Support the show

Burned by an aborted nuclear power plant new build that saddled the state's consumers with hundreds of millions of dollars in needless costs for years to come, South Carolina's Act 187 established a legislative study committee to ponder whether the state's electricity consumers might not be better off with competitive reforms of the Palmetto State's 150-year-old monopoly regulatory regime. A centerpiece of the committee's considerations is a sweeping analysis of the competitive options the state could pursue, comprehensively put together by the Brattle Group. We talk with two of the report's authors – John Tsoukalis, principal, and Andrew Levitt, senior consultant, at the Brattle Group – about their report with the top-line conclusion that South Carolina electricity consumers could save up to $300 million annually if the state's utilities participated in some form of large regional transmission pooling organization. The biggest cost savings, they determined, among the various scenarios considered in the report, were projected from a scenario envisioning if the entire Southeast region, not just South Carolina, were to throw in with PJM Interconnection, the large regional transmission operator encompassing from Illinois across to Pennsylvania, New Jersey, Maryland (PJM) and Virginia, in order to create a large, diverse wholesale power marketplace that helps minimize the considerable costs of meeting resource needs and operating a reliable powergrid.As directed by Act 187, the Brattle analysis also examined the potential consumer savings available from conducting a consolidated statewide integrated resource planning (IRP) process, rather than the less efficient utility-by-utility IRP planning that the state's utilities undertake with regulators to determine development or acquisition of new generation resources to meet reliability needs – and then performing competitive solicitations to help develop any new resources.Also as required by the law compelling Brattle's analysis, the report delved into the Third Rail of electricity politics: restructuring utility regulatory oversight to provide some form of competition in retail sales to consumers, whether residential or the large industrial and commercial customers. "Part of what I guess people don't really understand is, you can't really do retail choice unless you have competitive wholesale markets that are working already," Tsoukalis explains, calling the potentially near-term savings from grid regionalization the "low-hanging fruit" of the options available to lawmakers to consider going forward."There's so many options" in the report for lawmakers to consider, Levitt notes. "You can take a mix-and-match approach, different ways through governance, different ways to do transmission planning. You can share these things and not share those things. I'm 100% confident that there's a solution out there that will match the political will that's present at the moment. I don't myself know what the solution will be, but we're available to help craft it."Support the show

Grid Strategy's Rob Gramlich and Electric Advisors Consulting's Frank Lacey detail the findings of a policy analysis paper they co-authored, Serving Customers Best: The Benefits of Competitive Electric Vehicle Charging Stations.* We also talk with Doug Kantor, general counsel for NACS, the international association for the convenience store industry, which sponsored the policy analysis.The analysis found EV charging customers will be served best if utilities are not permitted to extend their monopoly into the nascent retail EV charging business. Yet utility regulators in states across the country are already ordering utility investments in public EV charging stations. The lack of proper economic incentives in the utility regulatory model is already becoming clear as reports abound that utility charging stations are often out of commission, in remote areas, or otherwise unavailable to drivers needing to charge their vehicles.Convenience stores view transportation electrification as an opportunity, not a threat, to the century-old gasoline retailing business, Kantor says. NACS sponsored the policy analysis to highlight the "potholes in the road" facing convenience stores, he says. "The way electricity markets work now doesn't work really well with a competitive business model."The paper identifies utility regulatory policies that will discourage private-sector investment in EV charging infrastructure and urges policy makers to address these problems now rather than later when the costs to consumers could be much higher."We're at the very beginning of this. It will be much more efficient for everybody if we get this right now instead of waiting. If we have to undo things that we've already done, that becomes costly and inefficient and subject to litigation," Lacey notes."There's going to be a tremendous amount of investment and [to] achieve the investment needs we have to do it efficiently. And we need to make it work best for consumers," Gramlich says. Utilities have a "key role" to play in electrification and the overall transition to a clean-energy economy, but EV charging should not be part of that, he says. "There are disadvantages to utilities being involved in certain activities ... that could harm service and could raise costs. And we want to get, in this sector like the other sectors, the best service at the lowest cost."* Energy Markets Podcast Host Bryan Lee is a co-author of the NACS-sponsored EV charging policy analysis paper.Support the show

Texas lawmakers just concluded their 88th biennial legislative session in Austin, and energy issues were very much at the fore as a range of proposals that would have incentivized investment in gas-fired generation and disincentivized renewables were hotly contested. The R Street Institute's Josiah Neeley discusses the energy-related aspects of the session, which he said could have turned out much worse for consumers than it did. Many of the pro-gas, anti-renewable measures proposed in the Senate were rejected by the House, while others resulted in compromises that minimized the harm to electricity consumers."I would say that at the start of the session, if you looked at what was being proposed, the way I would put it was it was not just bad, but comically bad, you know, comic book villain bad, some of it. And what you ended up with was mediocre bad," Neeley says. "I think consumers, they're not going to get relief from their bills, but there will be some limitation in terms of how much they're going to go up due to some of this stuff."Support the show

We reached out to ITC Holdings Corp. for the transmission owner's view on monopoly transmission development and the incumbent transmission owner's right of first refusal, known by the acronym ROFR, to build new interregional transmission grid projects.The issue has come to the fore as the federal government plans to undertake a massive buildout of the U.S. transmission network, and separately as the Federal Energy Regulatory Commission has proposed, in an as-yet unfinalized rulemaking, to partially reinstate ROFR for interregional transmission projects in hopes of sparking more much-needed transmission development.The competitive selection process is too cumbersome to rapidly move oftentimes  controversial transmission projects, says Nathan Benedict, an economist and ITC's manager of regulatory strategies. "Relaxing of the federal ROFR has made it harder to collaborate on projects. When we think about . . . what it takes to get a regional transmission plan put together, you need people to come to the table who trust one another and who are focused on the reliability of the grid and not focused on dividing out these pieces in order to subject them to competitive bidding."But how do we ensure that electricity consumers pay the least cost for the transmission buildout without competitive solicitations? "It's as easy as regulation," he says. Those who advocate denying the incumbent transmission owner the right of first refusal to build new transmission projects "are essentially wanting to bid on projects because they want monopoly rights," Benedict says. "What it is is it's a regulated bidding process that just creates new incumbents."State lawmakers have been rushing to adopt new state-level ROFR mandates, and several of those already in place have been subject to litigation in both state and federal courts. Benedict declined to speak directly to a recent Iowa Supreme Court decision rejecting that state's ROFR as "quintissentionally crony capitalism." Nevertheless, he rejected the idea that ROFR protections for incumbent transmission owners represents crony capitalism. "It's simply regulation like we've had for a hundred years," he says.Benedict is skeptical that FERC's proposed change in the federal ROFR standard will make much of a difference. He calls FERC's proposal a "limited reinstatement," and maintains full restoration of the federal ROFR is necessary. FERC's proposal is "a move in the right direction. But clearly, it's not enough to just do that."Support the show

Back in the 1990s, the University of Delaware's Willett Kempton conducted early vehicle-to-grid (V2G) experiments with PJM, operator of the MidAtlantic region's wholesale power market, testing the feasibility of using electric vehicles to provide regulation services to the grid. In this episode, Kempton speaks to the progress that's been made in the intervening decades to set the stage for today's electricity market, where EVs are just beginning to have enough market penetration to provide enough battery storage at scale to make bidirectional electricity flows between vehicles and the grid a reality – and an important reliability tool for grid operators who will be challenged by steadily increasing dependence on variable, nondispatchable generation resources.Kempton, professor in the College of Earth, Ocean and Environment and the Department of Electrical and Computer Engineering at the University of Delaware, is also an offshore wind expert, and talks about the wave of coming offshore wind installations domestically, taking advantages of scale economies that have make the technology almost at price parity with the wholesale markets.Support the show

Rich Glick, in his first wide-ranging interview since denied a second term at the Federal Energy Regulatory Commission by Senator Joe Manchin of West Virginia, discusses the need for building out the transmission grid and for reforms to wholesale power markets to better accommodate the evolving resource mix toward more renewable, intermittent resources. Competitive wholesale power market reforms also are needed to address increasing climate-induced stresses on reliability, the former FERC chairman said."I think that some of the markets around the country, the markets operated by the RTOs and ISOs around the country, certainly need to be reformed in a way to address the change in the resource mix that we are seeing, the different challenges that we see associated with those changes, and just, again, extreme weather," Glick said. Glick appeared to indicate surprise that FERC's proposed "relatively minor change" to federal right of first refusal, or ROFR, provisions in a closely watched transmission rulemaking engendered such opposition. "There was a lot of attention paid to that provision. But I think it underscored in many ways – hid the bigger problem that I think Order 1000 left, which is guiding or directing utilities towards (building) the wrong types of transmission in order to avoid the competitive bidding process." However his former colleagues at FERC resolve the ROFR issue, he said the "concept behind competition, including in transmission, is a good one and I think will prove valuable to consumers."Asked if the 1935 Federal Power Act provides the best platform for the transition to a 21st century clean-energy grid and economy, Glick said the nearly century-old law could stand to be revisited by Congress. When Congress acted in 1935 the line between state and federal jurisdiction was "pretty clear," he said. "But over time, the line has gotten much more blurry," in large part because of the advent of distributed generation and demand response, "which FERC has acted to encourage over the last decade or so. And that's caused some friction between the state regulators and between FERC." But given politics he suggested any changes to the 87-year-old law are unlikely.Glick, who as an adviser to the late Sen. Dale Bumpers, D-Ark., in the 1990s wrote proposed legislation to require electricity competition at retail nationally, also doesn't see much prospect politically for improving the abysmal state of electricity competition for retail consumers outside of Texas. "Competition can be helpful but it's an idea I don't – I wouldn't say its time has come and gone, but it's an idea that certainly is not – there's not a lot of focus on that in most states around the country these days."The retail competition bill he drafted for Bumpers also would have required competitive regional wholesale power markets throughout the country. Asked if FERC should use its authority to require RTO or ISO markets everywhere, he noted that the West and Southeast are the only remaining areas without some form of an organized regional market. Interested parties in the West are increasingly coalescing around the establishment of enhanced market regionalization, Glick said, noting the region's increasing acceptance of market regionalization is being driven by the need to better integrate the region's vast and far-flung renewable energy resources and respond to climate change. However, he held out little prospect for improving grid regionalization in the Southeast. "I think FERC arguably has the authority, but I think it's – I'm not entirely sure the commission is going to be anytime soon focused on the Southeast. So I think it's better at this point to focus efforts to encourage greater regional efforts including RTO development in the West, where there's there seems to be some momentum for that,Support the show

William Hogan, the Raymond Plank Research Professor of Global Energy Policy at Harvard's Kennedy School of Government, along with his colleague Scott Harvey, are the architects of the market structure employed in every competitive regional wholesale power market in the United States, known as the bid-based, security constrained economic dispatch model with locational marginal prices.This market model has been the subject of criticisms from its inception some three decades ago,  but in recent years it has come under renewed attack from interests who claim it is inadequate to support a transition to a clean-energy grid comprised of many zero marginal cost intermittent renewable generation resources.Hogan and Harvey authored a paper in October 2022 defending and explaining the market structure incorporating locational marginal pricing, or LMP. In this episode, Hogan elaborates and explains that, not only are critics wrong to suggest LMP markets aren't up to the task, but they are in fact the only means available to facilitate the clean-energy transition. "If you want an efficient market in the electricity system, this is all the only way to do it – that we know of," Professor Hogan tells the podcast. "This model is ubiquitous and successful. I call it successful market design."Hogan scoffs at criticism that the LMP market design isn't the correct vehicle to accommodate increasing amounts of zero marginal cost renewable resources. Such criticisms fail to recognize the role that battery storage and demand-side resources will play in decarbonized markets, he says. "Even if you had 100% renewables (on the grid), there will be periods of time when you're capacity short because you just didn't have enough of them. And then the demand side is going to be much more important because we're going to have to adjust demand. And implicit in the theory, or explicit in the theory, is that the price will be set by the demand side, not by the supply side, but it's the same marginal cost principle. You get the same answer in terms of economic dispatch. And you get the same pricing outcome across the grid. So absent the fantasy world of an infinite supply of zero marginal cost energy, that theoretical problem doesn't arise."The empirical proof that  the criticism is misplaced is evident in the Western interconnect, where increasing numbers of utilities are joining the Western Energy Imbalance Market, which employs LMP pricing, primarily to accommodate the rapidly increasing amounts of renewable energy resources in the region. "This is a very powerful empirical argument that says, no, you've got it exactly backwards. It's not that we need to get rid of this. We need to strengthen it and expand it," Professor Hogan says. "Because the basic design works in theory and it works in practice, and all the other things that we have tried – I don't know how many of your listeners know but PJM tried something else first. And it didn't work. And New England tried something else first, and it didn't work. And California tried something else first, and it didn't work. And Texas tried something else first. And it didn't work. And then they all had to revise and reform and go through the agony of that process to get to bid-based security-constrained economic dispatch with locational marginal prices, which is now done across all of these. And New York started this from the beginning, the Midwest started this from the beginning, the Southwest Power Pool when it converted to an RTO started with this, so that's why it's now true in all of these markets in the United States."Support the show

MIT economist Tim Schittekatte (tsgee-teh-kah-tuh) details his recent working paper, Electricity Rate Design in a Decarbonizing Economy: An analysis of time-of-use and critical peak pricing. Two of his co-authors are lions of energy economics, MIT economists Paul Joskow and Richard Schmalensee. The paper finds that a combination of time-of-use (TOU) and critical peak pricing (CPP) at retail can approximate the price signals electricity consumers would otherwise get from the competitive wholesale power markets.Twenty years ago, price-responsive demand was supposed to be a major benefit of electricity restructuring at retail. But beyond the more sophisticated commercial and industrial large end-users, it has been frustratingly elusive to have effective demand response. The MIT working paper provides an avenue to approximate the market forces of the stated first-best option in which electricity consumers respond to actual prices in the marketplace. The paper's second-best option, a combination of TOU and CPP pricing, provides about two-thirds of the price responsiveness available from the first-best option, and could be implemented by state regulators regardless of the state's retail market design.Smarter rate design also provides an avenue for capturing more value from the buildup of smart meters over the last decade and a half, the capabilities of which have been vastly underutilized. Schittekatte and his co-authors note that "only a small fraction of these meters are presently being used to support more effective retail rates." In their commentary on the working paper, Schittekatte and his co-authors propose their rate framework to address the problem that only 7.3% of U.S. consumers are enrolled in a rate plan alternative to the prevailing flat price charged for electricity 24 hours a day, seven days a week, regardless of the price volatility and operational stresses of the wholesale bulk power markets. The problem is also widespread around the world in countries with competitive wholesale electricity markets, the economist notes.This disconnect between the flat retail price electricity consumers see and the widely fluctuating prices in the wholesale market discourages electrification, Schittekatte and his co-authors say, calling for "urgent action to reform retail electricity rates so that they that encourage, rather than work against, cost-efficient electrification while not ignoring considerations related to equity, complexity, consumer acceptability, and the recovery of reasonable costs incurred by utilities. We do not propose a single optimal solution for all situations, but rather we have identified particularly promising directions of reform."Schittekatte also sees the paper's alternative to flat rates as an answer to the "backlash" that occurs when retail electricity prices suddenly increase causing consumer concerns and prompting politicians and regulators to intervene in markets. As examples, he cites Texas in the U.S. and Spain in the EU. "They don't understand what goes on because that volatility is unseen compared to other markets and politicians get very, very [unrested] and they do market intervention," he says.The EU economist also sees a role for demand response to play in tempering the need for investments in the network expansions, particularly distribution, necessary to accommodate electrification of home heating and transportation. "We've got to invest in networks, but please, don't excessively invest in networks."Support the show

More than ten years ago, Dominion Energy convinced Virginia lawmakers to clip the wings of the state's utility regulator, the State Corporation Commission. After a decade in which Virginia Power overcollected on its rates as an unregulated monopoly, the Legislature in Richmond had finally had enough and passed legislation restoring the SCC's utility ratemaking authority. In this episode, Brennan Gilmore, executive director of the advocacy group Clean Virginia, discusses this lost decade when Dominion obtained virtually everything it wanted in Richmond and overcollected in rates nearly $2 billion, and details the efforts of his group and a vast coalition of other interests in working to successfully pass  legislation restoring the SCC's authority to oversee Virginia Power's rates in the public interest.Gilmore, in a statement heralding passage of the legislative package, proclaimed: "For far too long Dominion Energy has wielded its political influence and contributions to write the rules of its own regulation. This year's legislative session has shown definitely that this era of self-regulation has come to an end.""We've been fighting for this and we've been fighting to minimize Dominion's political influence, and have been pushing back at them on the electoral playing field where the utility, I think, plays an outsized and inappropriate role, in hopes that we could get to a place where we would have good policy that protected consumers in Virginia," Gilmore tells EMP. "I've worked on this every day for the last four to five years. I didn't think it was going to happen this soon."Gilmore gives credit for the outcome to involvement by Gov. Glenn Youngkin, who took an active role in the negotiations that produced the compromise legislative package, calling the Republican the first governor in years – whether Republican or Democrat – who has not been "asleep at the wheel" while Dominion obtained a succession of bills benefiting the utility's shareholders at the expense of the utility's electricity consumers.But he also gives credit to the changing face of the Virginia Legislature, which has seen an upswell in elected officials who disavow taking campaign contributions from utilities. Clean Virginia provided an important campaign finance alternative for politicians seeking office in Richmond. But Gilmore notes that his advocacy group was part of a huge coalition advocating for reform, including the Virginia Manufacturers Association, Google and Amazon, the Sierra Club and others. "It was basically any institution or organization or individual who pays an electric bill in the state was against that Dominion legislation," he says.Clean Virginia's efforts to restore the public interest in utility oversight doesn't stop with this initial victory, Gilmore says, noting the face of the Legislature is changing in Richmond, with redistricting prompting retirement of Dominion "stalwart allies" amid a dramatic upsurge in candidates who refuse to accept contributions from utilities. This makes him optimistic that future legislative triumphs will be in store for the Commonwealth's captive ratepayers. But until the day there is an "equitable campaign finance system," Gilmore says, Clean Virginia will continue to "fight fire with fire ... and put money on the table so that utilities aren't the only option to get into office."Support the show

Jason Stanek, the lame duck chairman of the Maryland Public Service Commission, is riding out the remainder of his term in office with a "maximum enforcement" campaign to crack down on retail suppliers "that engage in deceit, confusion, and trickery in order to close the deal." January saw the second-highest number of consumer complaints received, and February is shaping up to set a record for the month, he said, promising the PSC will use "expedited procedures to, if necessary, eject suppliers from the market."He discusses how he's lost faith in retail competition in electricity. "I am not the cheerleader of retail choice that I once was," he notes, adding, "I can tell you that there's an appetite amongst a lot of state legislators who would say that after 23 years since we've been restructured, this experiment has not gone according to plan and perhaps we just call it a day." But he said he's not ready to give up yet. "We eject the bad actors, then we could rehabilitate it. Focus on the value, focus on products, focus on innovation."Stanek concedes the state's market structure could be improved, but he called himself an implementer of policy. If retail suppliers want a better market structure then they should to go to Annapolis and advocate for change, he said. But "structural change is a heavy lift" and utilities are "well-entrenched" in state capitals, he noted.Calling Maryland a "progressive state" with community solar, utility solar and electric vehicles mandates, he cautioned against folding too many clean-energy mandates into utility customer's rates. "We have to remember that, at the end of the day, whether the customer takes their commodity from the utility or the supplier, costs are going up. And all of these programs cannot be borne on the backs of utility ratepayers."Stanek looks forward to the remainder of his five-year term, which ends June 30. "I am not recusing myself on any active cases just yet. I still have another four-and-a-half months on the job," he said. "Between now and June 30th my sole focus is on making sure that my work at this agency gets done. And then after June 30th I'll begin to consider what comes next."Support the show

Davante Lewis credits grassroots community organizing and coalition building for helping him defeat a long-time incumbent to garner a seat on the five-member Louisiana Public Service Commission. Lewis – who professes he's a regulator and "policy nerd" and not a politician – aspires to assuring the clean-energy transition is also a just transition. He wants to transform his Louisiana district's descriptor from "Cancer Alley" to "Answer Alley" by promoting jobs and jobs training to support rapid growth in renewable energy sources, providing a model for a just clean-energy transition nationally. Lewis has a Ratepayer's Bill of Rights that addresses punitive late fees and service cutoffs that disproportionately and adversely affect lower-income communities. He also looks to create a consumer advocate position that represents ratepayer interests in cases before the commission. He wants to bring the community into PSC open meetings along with the more typical crowd of lobbyists, lawyers and other utility industry interests. "I'm going to bring the people back in these rooms." Lewis wants to engage in a dialogue with the natural gas, oil refining and petrochemical industry interests in his district – as well as the utility industry interests he ran against as a candidate – confident that, while they may not agree, they will come to understand one another and work productively together. He calls for an all-of-the-above strategy in a  just clean-energy transition, but particularly eyes rooftop solar and battery storage and offshore wind for Louisiana. In developing an all-inclusive strategy, Lewis says "competition and deregulation" will be a key component of discussion over the next three years. "People want competition because they want choices."But while he sees carbon capture and sequestration (CCS) becoming a priority for some in Baton Rouge, potentially affecting the role of the commission, call Lewis deeply skeptical but open to being persuaded by science showing the proposed technology to be "the safest way to handle environmental and consumer concerns."Support the show

Chris Carmody, executive director at Carolinas Clean Energy Business Association, says energy-intensive electricity customers will leave or not relocate to the Carolinas because of the difficulties they face buying their energy needs from the resource mix they prefer. There's "no tolerance for anything that resembles competition. And that really is to the detriment of economic development in the Carolinas," he said.While North Carolina has a carbon-reduction plan in place, Carmody said it essentially cements Duke's monopoly into the future, and the utility's clean-energy investment plans rely on untested technologies, like small modular nuclear reactors, rather than the least-cost renewable energy options in the market. Rather than a threat to the utility's bottom line, "I think they really see [the carbon-reduction plan] as an opportunity to make a lot of money," he said.Carmody sees South Carolina differently, describing the state's political atmosphere as leaning toward opening up wholesale power market competition by joining a regional transmission organization. "I think in terms of potential market development and discussion the Carolinas will be one of the most interesting places to watch over the next few years," he said.Support the show

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

Dena Wiggins, president and CEO of the Natural Gas Supply Association, which includes the Center for LNG, urges policymakers to recognize that "markets are working" and rejects export bans and price controls as an answer to the energy crunch consumers face today. "Markets do work," Wiggins says. "We really believe in the operation of a market. And rather than having a regulator or a commissioner or policymaker pick winners and losers, we think that a price on carbon would give the right incentive" for investment necessary for the transition to a clean energy future.Wiggins calls for greater support from the Biden Administration and FERC for natural gas infrastructure development, and rejects the idea that development of infrastructure for natural gas, a fossil fuel, should be discouraged. "We have long been in favor of a cleaner energy future, supporting a cleaner energy future, and we think natural gas is an important part of that," Wiggins says. The NGSA chief and energy lawyer offers her first impressions on the landmark Supreme Court decision in West Virginia et al. v. EPA, which she calls "one of the blockbuster opinions from this term in the court."Support the show

At Harvard Law School's Electricity Law Initiative, Ari Peskoe works to promote market entry for clean energy, parsing through an arcane world of obsolete federal and state laws, most of which is up to a century old and even older and was not written with our current electricity needs in mind. Peskoe says he prefers the competitive market model to the monopoly utility approach to regulating electricity because it poses greater opportunities for the kind of innovation we need to decarbonize our electricity system in response to the ongoing climate crisis. It is in this vein that he worries that FERC's proposal to allow utilities the first right to build necessary power grid expansion projects might lead to gold-plating the grid, rather than the least-cost solutions for electricity consumers. Nevertheless, he is optimistic that FERC's transmission NOPR can bring state and federal regulators together to work collaboratively to build out necessary power grid architecture. He is quite critical of merchant generators in New England, whom he accuses of acting anti-competitively by working to block a Massachusetts initiative to bring state-subsidized clean Canadian hydropower into the regional wholesale power market. "What these generators want is essentially a market just for merchant generators," Peskoe says. Support the show

Maggie Shober is a utility analyst and clean-energy advocate with the Southeast Alliance for Clean Energy. She spends a great deal of her time working the IRP processes state-by-state for the various large utilities in the region, such as Duke, Florida Power & Light,  Southern Co. and the Tennessee Valley Authority, to ensure that utility planning embraces clean-energy resources and other measures to limit carbon emissions and costs for consumers. But she clearly would prefer to see a FERC-regulated competitive wholesale power market in the region, which she believes would better allow integration of renewable energy resources by utilities in the Southeast. However, Shober notes, "There are very large, very powerful utilities in the region that are absolutely against it. And so it's going to be either somehow getting them on board, or dragging them kicking and screaming into a market." But she does see a glimmer of hope in the Carolinas, where policy makers are increasingly considering RTO development in the wake of billion-dollar boondoggles involving aborted nuclear power plant development efforts and coal ash disposal problems that have contributed to escalating electricity costs for consumers. "Where we've seen some of the biggest utility boondoggles in the region is where we've had movement on this," Shober observes. Developments at TVA are another arena in the Southeast where progress could be made toward lessening utilities' monopoly control over captive ratepayers. The city of Memphis, which operates one of the largest municipally owned utility systems in the country, is expected to make a decision by year's end whether to exit the TVA system in order to obtain cleaner and less-expensive electricity in the competitive market. Still, she is a realist, noting how TVA has been "politically protected" by "pretty powerful senators" in Congress. Support the show

Court Rich, an attorney representing solar developers and others before the Arizona Corporation Commission, recounts how the state's 20-year-old law promoting retail competition in electricity was thwarted for years by the state's utilities and then, recently, ultimately repealed after an army of more than a hundred lobbyists descended on the Legislature. The bill, through some sleight-of-hand rewriting of the governing statute, was then touted by the utilities as being a consumer-protection law, in what he calls an exercise of "pure political power from the monopolies." Interestingly, he says public exposure of  Dark Money groups and the utilities' influence at the Corporation Commission has actually led to a diminution of the industry's clout with individual state regulators. That has "handcuffed them a little bit," Rich says. But the recent legislative battle, in which lawmakers ordinarily supportive of those in a diverse coalition opposing the bill changed their votes in the face of intense lobbying from utilities, shows utilities' influence with lawmakers, while somewhat diminished, was still ultimately effective.Support the show

Jason Stanek, chairman of the Maryland Public Service Commission, talks about competitive retail power markets,  the commission's recent decision to allow supplier consolidated billing, the treatment of state-subsidized resources in FERC-regulated wholesale power markets, and Maryland state policies to address the climate-change threat by rate-basing  offshore wind, battery storage and EV battery charging stations.Support the show

Joy Ditto, president and CEO of the American Public Power Association, discusses her member utilities' efforts to transition to a clean-energy grid within the traditional vertically integrated utility construct. She provides a mixed view of the benefits APPA-member utilities have enjoyed as a result of the Federal Energy Regulatory Commission's open-access wholesale power market regime, and calls for passage of federal legislation to provide non-profit utilizes, like municipal utilities and rural co-ops, the same sort of federal subsidy that for-profit utilities and others derive for implementing renewable wind and solar energy technologies.Support the show

Pat Wood III was at the forefront of important pro-consumer electricity policy changes 20 years ago as the former chairman of both the Federal Energy Regulatory Commission and the Public Utility Commission of Texas. While his pro-competition agenda at FERC was stymied by political blowback, the past 20 years have shown the wisdom of pro-competition policies in electricity, he says, calling for current regulators to just "rip off the band-aid" and get to a competitive market model in the public interest. Today, he is once again at the forefront of change in the electricity industry as he, in his role as CEO of the Hunt Energy Network and President of Hunt Power, is betting big on the future of energy storage, building hundreds of megawatts of battery storage capacity in Texas.Support the show

Public Citizen's Tyson Slocum sees competitive markets and traditional vertically integrated monopoly utilities as equally capable of delivering pro-consumer results in the transition to a clean-energy grid and economy. But both need better oversight in order to deliver on that promise, he says. Slocum calls for greater diversity of stakeholder representation in the competitive regional wholesale power markets, and is enthusiastic about FERC's recent move to establish an office of public participation. That office is making moves to provide financial support to groups like Public Citizen to better enable broader participation in Federal Energy Regulatory Commission proceedings. Slocum will look to leverage that opportunity to ensure that the buildout of transmission to enable a green grid transformation doesn't unnecessarily impose costs on consumers. Support the show

Larry Gasteiger, executive director of WIRES, an international trade group advocating for transmission development in North America, discusses the broad and systematic difficulties in getting necessary long-distance transmission lines sited and built. He shares his views on ongoing developments before the Federal Energy Regulatory Commission, the U.S. Department of Energy and in Congress that aim to address the many issues that cause transmission line siting to take frustratingly long years to complete - assuming that one of the several states involved doesn't veto the project along the way. This infrastructure must be built if the U.S. is to meet its decarbonization goals for the electric grid, he says. The WIRES official speaks to his view that competitive processes to get transmission built haven't worked thus far, while holding out the prospect that down the road, perhaps after a pilot project irons out the kinks in the process, competitive transmission development could become viable for developing long-distance, multi-state transmission lines. A recent Senate hearing where committee members were overtly hostile to FERC's recent natural gas pipeline policy statement, which addressed climate change considerations under the National Environmental Policy Act, was a "poster child" for the sort of blowback the commission's pending transmission policy statement could run into without near unanimous agreement on the controversial issues, he observed.Support the show

Phil Moeller, , Executive Vice President, Business, Operations Group and Regulatory Affairs at the Edison Electric Institute, discusses net energy metering, infrastructure development and FERC's docket on updating its transmission policy, including ROFR, whether utilities should be the sole source of electricity for EV charging in monopoly-regulated states, the threat of cyber attacks on the electric system, particularly in the wake of Putin's war of aggression in Ukraine, and competitive regional wholesale power market development.He also addresses the role that plentiful, cheap natural gas has played in keeping electricity prices stable for the last decade, and the lack of policy emphasis on the need for better coordination between the natural gas and electric sectors as part of our transition to a clean-energy economy, a problem Winter Storm Uri demonstrated tragically last year. The need for natural gas resources will only become more acute as we introduce more and more intermittent renewable resources onto the grid, he says.Support the show

Few in the electric industry can boast Alison Silverstein's achievements in contributing to pro-consumer, pro-competitive reforms at both the state and federal levels. And there is perhaps no one better situated to discuss the causes and ramifications of last year's deadly weather-induced grid outage in Texas last year. Perhaps most intriguing, however, is Silverstein's call for building on the indisputable gains from pro-competitive reforms in electricity to ensure competitive markets build in social policies to protect those most at risk from the avalanching impacts of climate change we are experiencing already from a warming planet."The problem is that today we have not adjusted regulation or found the right balance - certainly here in Texas, arguably in California and other places - between what can we trust competition to do effectively and where do we need mandates and affirmative social policy to step in. Markets are wonderful at saving money and promoting efficiency," Silverstein says. "They need to be better at reliability. They certainly are terrible at equity. But we have significant reliability challenges that have to be handled with much more sophisticated analysis and mandatory rules that we haven't put in place. And we need much better changes in how we handle equity as a society, rather than waiting for markets to do that. So, we should be using competition for what it's good at and using social policy for what it's good at instead of trying to make the market do it all." Support the show