The Obscure Federal Agency That Soon Could Raise Your Electric Bill: 5 Questions Answered on FERC
By Joshua D. Rhodes
Editor's note: On or before Dec. 11, the Federal Energy Regulatory Commission (FERC) is expected to take action on a controversial proposal by Energy Sec. Rick Perry that seeks to prevent noncompetitive coal and nuclear power plants from retiring prematurely. Depending on how such a rule is structured, analyses have estimated that it could cost ratepayers in affected regions up to several billion dollars yearly. Energy scholar Joshua Rhodes explains what FERC is and why it has so much power over energy markets and (indirectly) the prices consumers pay.
Why is this proposal so controversial?
Sec. Perry has asserted that "the resiliency of the electric grid is threatened by the premature retirements of ... fuel-secure traditional baseload resources." While exact details are not known, the rule Perry has proposed would "make whole" electric generators that can store 90 days of fuel on-site.
This means that even if those plants cannot make money in their respective markets (because other generators can provide electricity more cheaply), they will receive extra payments from the grid operator to recover their operating costs and provide a "fair" return on equity to plant owners. According to FERC Chair Neil Chatterjee, the extra money to keep those plants running will come from electricity customers in the affected areas.
Perry's rationale is that by storing 90 days' worth of fuel on-site, these plants make the power system more reliable, because they can run even if emergencies or disasters affect other fuel sources such as natural gas pipelines. Therefore, they should receive support that enables them to keep operating.
However, because this policy would benefit only coal and nuclear power plants—the only types that store fuel on-site—it has been interpreted as an excuse to subsidize plants that are struggling to compete. No shortage of ink has been spilled on this proposal, most of it very critical.
As governor of Texas, Rick Perry argued that markets should guide energy choices, Now, as secretary of energy, he asserts that governments routinely pick technology winners and losers. USDOE
The counterview is that our electricity system is changing. The average U.S. coal plant is 45 years old, which is near the end of its expected operating life, and the average age of our nuclear fleet is 37 years old.
Some experts point to an analysis by the Rhodium Group that shows fuel supply to be responsible for only 0.00007 percent of electricity disruptions. Opponents of Perry's proposal argue that other available options, such as wind and solar power, are cheaper and cleaner than coal, and will produce power at more stable prices.
Moreover, under the Federal Power Act, FERC is not supposed to favor one form of generation over another. The Heritage Foundation, a conservative think tank, has called the proposal "a massive subsidy." Other critics say the way to promote reliability and resilience in a competitive energy market is to create a new market for that service and let everyone bid to supply it.
What does FERC do?
FERC is an independent federal agency that regulates rates for cross-state transmission of our main energy sources: oil, natural gas and electricity. It also is responsible for reviewing siting for natural gas pipelines; creating and enforcing reliability standards for interstate electricity transmission networks; and monitoring and investigating energy markets. Most local aspects of the energy system, such as retail sales and billing, are typically overseen by state public utility commissions.
FERC also produces market reports, predictions and analyses of issues such as expected wholesale energy prices and the changing mix of power plants that supply our electricity. It has the power both to create and to enforce rules governing energy markets under its purview.
Who serves on the commission, and how are they chosen?
At full strength FERC has five commissioners, who are appointed by the president and approved by the Senate for five-year terms. It is designed to be a bipartisan independent agency, so no more than three commissioners can be from the same political party, and each commissioner has an equal vote in regulatory matters.
FERC and its commissioners are not overseen by the Department of Energy, but DOE can participate in its deliberations as a third party and can propose rules for the commission to consider.
Don't states also regulate electricity prices?
FERC regulates interstate wholesale electricity markets, in which electricity crosses state lines. Retail prices, which are what most customers see on their bills, are regulated at the state level. Retail prices are set differently in different parts of the U.S., and sometimes even within states. However, FERC's wholesale pricing rules ultimately shape the prices that retail electricity suppliers are allowed to charge consumers.
For fully regulated areas, such as the Southeast, rates are proposed by utilities and then must gain approval from the state's public utility commission. Some states have deregulated their electricity markets and allow customers to choose their power provider. In these areas, providers have more latitude to set their own rates, but the assumption is that market competition will keep rates low.
An Energy Department study on grid reliability, released in August, concluded that coal and nuclear power plants are struggling because they are being undercut by cheap natural gas and renewable energy and low growth in electricity demand. It also noted that "merchant" plants—those that compete based on price in deregulated states—accounted for a majority of recent early retirements. DOE's proposal is limited to such plants, mainly in the Northeast and Midwest.
Most generating capacity added since 2002 has been natural gas or renewable, while most retirements have been coal, nuclear and older natural gas plants. EIA
If FERC issues a rule that would subsidize coal and nuclear plants, can opponents do anything about it?
Opponents' main recourse would be to sue in federal court. No lawsuits have been announced yet, and none is likely to be filed until FERC issues a decision. But a joint letter opposed to the proposal from a group of strange bedfellows, including the American Council on Renewable Energy, the American Petroleum Institute, the American Wind Energy Association and the Interstate Natural Gas Association of America, signals that resistance could be significant.
Joshua D. Rhodes, Ph.D. is a Research Fellow at the Energy Institute and the Webber Energy Group at the University of Texas at Austin.
Reposted with permission from our media associate The Conversation.
- Chemicals in Cosmetics Linked to Lung Damage in Children, New ... ›
- 33 Toxic Hair Straighteners Under International Recall Still Sold in US ›
EcoWatch Daily Newsletter
As the coronavirus has spread around the globe, so have the germs of misinformation and conspiracy theories about the new disease. Fake news about the virus is so prevalent that health professionals have started referring to it as an "infodemic."
- Doctors Aren't Just Fighting a Pandemic, but Also an 'Infodemic ... ›
- Trump Orders Hospitals to Stop Sending COVID-19 Data to CDC ... ›
- Facebook, Twitter Remove Trump Posts Sharing False COVID-19 Info ›
A new report shows the U.S. government bought more than $350 million in bonds issued by oil and gas companies and induced investors to loan the industry tens of billions more at artificially low rates since the coronavirus pandemic began, Bloomberg reported.
- Fed's Corporate Debt-Buying Could Mean Big Oil Bailout - EcoWatch ›
- Marathon Petroleum Takes Bailout Tax Breaks During Pandemic ... ›
By Karen Charman
When President Donald Trump visited California on September 14 and dismissed the state Secretary of Natural Resources Wade Crowfoot's plea to recognize the role of climate change in the midst of the Golden State's worst and most dangerous recorded fire season to date, he gaslighted the tens of millions of West Coast residents suffering through the ordeal.
Foxes Guarding the Henhouse<p>Before he assumed power, Trump attacked regulations as unnecessary barriers to freedom and economic prosperity. Since taking office, he has targeted anything enacted by the administration of his predecessor, Barack Obama, and taken steps to withdraw the U.S. from the Paris agreement, the international effort to combat climate change. He has also staffed heads of key agencies with climate deniers of various stripes, forced out career public servants and created a hostile work environment for those who don't profess loyalty to his deregulatory agenda.</p><p>Like Trump himself, some of his cabinet choices displayed an audacious penchant for <a href="https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html?action=click&module=Spotlight&pgtype=Homepage" target="_blank">self-dealing</a> and abusing their positions of authority. One example is Trump's first Environmental Protection Agency (EPA) Administrator, Scott Pruitt, who aggressively worked to overturn Obama's climate regulations, spent most of his time in <a href="https://www.washingtonpost.com/national/health-science/trump-epa-head-steps-down-after-wave-of-ethics-management-scandals/2018/07/05/39f4251a-6813-11e8-bea7-c8eb28bc52b1_story.html" target="_blank" rel="noopener noreferrer">private meetings</a> with fossil fuel and chemical company executives, sidelined career EPA staff and reconfigured independent scientific advisory boards to make them more supportive of the industries EPA is charged with regulating. Dubbed "<a href="https://www.latimes.com/politics/la-na-pol-pruitt-leaves-20180705-story.html" target="_blank" rel="noopener noreferrer">one of the most scandal-plagued Cabinet officials in U.S. history</a>," Pruitt resigned in disgrace after revelations about his multiple brazen abuses, including using the agency as his personal concierge service and piggy bank.</p><p>Pruitt's deputy, Andrew Wheeler, a <a href="https://www.cbsnews.com/news/andrew-wheeler-acting-epa-administrator-former-number-two-before-scott-pruitt-resignation/" target="_blank">former coal industry lobbyist</a> and longtime Republican Washington insider, took over and has continued Trump's deregulatory agenda apace.</p><p>At the Department of Interior (DOI), a sprawling agency that oversees 75 percent of the country's public federal lands and includes the U.S. Geological Survey, which is tasked with evaluating natural hazards that threaten life and the health of our ecosystems, Trump installed another flamboyant anti-environmentalist to head the agency. Like Pruitt, Trump's first Interior Secretary Ryan Zinke aggressively attacked environmental regulations, <a href="https://www.washingtonpost.com/news/energy-environment/wp/2017/05/07/epa-dismisses-half-of-its-scientific-advisers-on-key-board-citing-clean-break-with-obama-administration/" target="_blank">ditched more than 200 advisory panels</a>, and pushed to open up vast swaths of public land to oil and gas drilling. Described by one environmental group as "<a href="https://www.washingtonpost.com/national/health-science/interior-secretary-zinke-resigns-amid-investigations/2018/12/15/481f9104-0077-11e9-ad40-cdfd0e0dd65a_story.html" target="_blank" rel="noopener noreferrer">the most anti-conservation Interior secretary in our nation's history</a>," Zinke was forced out after numerous highly publicized conflict-of-interest scandals.</p><p>The DOI is now run by Zinke's deputy secretary, David Bernhardt, another longtime Republican Washington insider and former oil industry lobbyist who has also been the subject of <a href="https://slate.com/news-and-politics/2020/05/this-is-still-happening-david-bernhardt-trump-lincoln.html" target="_blank">several government ethics complaints</a> for various violations favoring polluting industries.</p><p>More recently, longtime climate change denier David Legates, a climatologist at the University of Delaware previously <a href="https://insideclimatenews.org/news/19032015/u-delaware-refuses-disclose-funding-sources-its-climate-contrarian" target="_blank">funded by fossil fuel interests</a>, was hired for a <a href="https://www.npr.org/2020/09/12/912301325/longtime-climate-science-denier-hired-at-noaa" target="_blank" rel="noopener noreferrer">top job</a> advancing weather modeling and prediction at the National Oceanic and Atmospheric Administration (NOAA). Legates has called for <a href="https://www.democracynow.org/2020/9/18/noaa_david_legates_climate_crisis" target="_blank" rel="noopener noreferrer">increasing carbon emissions</a>.</p><p>The Trump administration has done much more than stack government agencies with fossil fuel industry proponents. It has removed or diluted discussion of climate change from as many government platforms as it can and decimated independent scientific advisory boards that provide unbiased, fact-based information the government needs to enact policies that protect the public. It has also <a href="https://thehill.com/policy/energy-environment/482352-trump-budget-slashes-funding-for-epa-environmental-programs" target="_blank" rel="noopener noreferrer">slashed environmental agency staffing and budgets</a>.</p>
The Damage So Far<p>A September 17 <a href="https://rhg.com/research/the-rollback-of-us-climate-policy/" target="_blank">report</a> by the Rhodium Group calculates that 1.8 billion tons more greenhouse gases will be released over the next 15 years as a result of climate change rollbacks the Trump administration has achieved so far. These include repealing Obama's main climate policy, the Clean Power Plan, which was intended to reduce dirty emissions from power plants; increasing pollution from cars by rolling back fuel economy standards and challenging California's longtime authority to set stricter emissions standards; targeting controls on hydrofluorocarbons, powerful greenhouse gases used mainly in refrigerators and air conditioners that also destroy the Earth's protective ozone layer; and allowing unreported and unregulated emissions of methane, another potent greenhouse gas, by oil and gas companies.</p><p>Besides these measures, Trump is also trying to gut core environmental statutes like the Clean Air Act, the Clean Water Act, the National Environmental Policy Act and the Endangered Species Act, all of which were enacted to protect human health and preserve a livable world.</p><p>The Paris agreement aims to keep the rise in average global temperatures at less than 2 degrees Celsius above pre-industrial levels and hopefully cap it at 1.5 degrees C or lower. We are now at approximately 1.2 degrees C and counting.</p>
- Trump Admin Guts Endangered Species Act in the Midst of Climate ... ›
- Climate Change Purged From White House Website - EcoWatch ›
- California Burns Because of the Climate Crisis While Trump ... ›
By Jan Ellen Spiegel
It wasn't so long ago that the issue of climate change was poised to play a huge – possibly even a decisive – role in the 2020 election, especially in the race for control of the U.S. Senate. Many people supporting Democratic candidates saw a possible Democratic majority as a hedge against a potential Trump re-election … a way to plug the firehose spray of more than 100 environmental regulation rollbacks and new anti-climate initiatives by the administration over its first term.
Potential Climate Voters<p>In a September 1 memo on climate and the election, Andrew Baumann, vice president of the consultants Global Strategy Group, wrote: "Few issues have seen as dramatic a shift in public opinion as climate change has over the last few years. Only marriage equality and the recent shift in views around racial justice outpace the rapid growth in the salience of climate change as an issue."</p><p>Calling it a "winning political issue" the memo says: "First, it is clearly a motivator for both younger and Latinx voters. Second, it has the power to move swing voters, particularly center-right white women."</p><p>Baumann points to a finding that when a group of such women were asked generic ballot questions, Democrats trailed by nine percentage points. But when the question was revised as a choice between:</p><p>"A Democrat who supports taking strong government action to combat climate change.<br>A Republican who opposes taking strong government action to combat climate change."</p><p>… the result was a 29 percentage point shift, putting Democrats ahead by 20 percentage points among that same group.</p><p>"I think it is playing a role," says Senator Sheldon Whitehouse, D-RI, a longtime outspoken climate activist who is on the Senate Environment and Public Works Committee and also on the Senate Democrats' Special Committee on the Climate Crisis. If Democrats win back the Senate, he stands to play an even more pivotal climate role as part of the majority. He is not up for re-election this year.</p><p><span></span>"I think from the Democratic side it's playing a role in generating enthusiasm – particularly making younger voters feel that they have a real stake in this election. On the Republican side, I think things have moved enough that candidates can no longer get away with simply scoffing about climate change."</p>
Climate a Top Concern for Youths, Latinx<p>So who's still thinking climate? Mostly young voters – 18 to 25 or 29 and Latinx voters.</p><p>Climate and the environment are the top concern among young voters, just above racism and healthcare according to <a href="https://circle.tufts.edu/latest-research/poll-young-people-believe-they-can-lead-change-unprecedented-election-cycle" target="_blank" rel="noopener noreferrer">CIRCLE</a>, the Center for Information and Research on Civic Learning and Engagement at Tufts University, which focuses on the political life of young people in the U.S. For Latinx youth, it drops a bit but remains in the top three.</p><p>The issues young people care about have an impact on how they volunteer their time, says Kristian Lundberg, an associate researcher at CIRCLE. He says that's played out most notably through the Sunrise Movement, which focuses on climate change and the environment along with other key activist groups such as Black Lives Matter and March for Our Lives.</p><p>He points to polling this summer that showed that 83% of 18-to-29-year-olds felt they had the power to change things. "Young people feel much more empowerment than in 2016 and 2018," Lundberg says. "It's intentional these movements are carving out space for young people. It's an important strategy."</p><p>In positions of power in these organizations, young people have developed peer-to-peer outreach on activism. And Lundberg says young people have made the leap that connects activism to voting as a lever for change. "In the past in very close races, young people breaking heavily have provided the margin of victory," he says.</p><p>CIRCLE is highlighting 10 U.S. Senate races as ones in which young voters can be decisive. Several of them have notable climate or environmental components – most prominently the Colorado and Montana races.</p><p>The Republican incumbents in each state – Cory Gardner in Colorado and Steve Daines in Montana – are running against a popular Democratic governor – John Hickenlooper in Colorado, now out of office — and Steve Bullock, still the governor of Montana. Both governors have had to balance their state's fossil fuel economic interests with supporting climate change solutions.</p>
Tying Climate Change to the Economy<p>In August, Data for Progress, a progressive research think tank, released polling on climate change – including in the battleground Senate elections in Arizona, Iowa, Maine, and North Carolina – showing voters back a Senate candidate supporting strong climate action.</p><blockquote>Climate change as 'mobilizing issue … key persuasion issue.'<br></blockquote><p>It also showed that linking climate change to the economy may be key. That means talking about clean energy and jobs together, says Danielle Deiseroth, climate data analyst for <a href="https://circle.tufts.edu/latest-research/poll-young-people-believe-they-can-lead-change-unprecedented-election-cycle" target="_blank">Data for Progress</a>. She says that in addition to jobs, climate change issues include climate justice and economic equality – both of heightened interest because of fallout from western wildfires.</p><p>"Climate change, we've observed over the last year or so, is a key mobilizing issue and a key persuasion issue," she says. "Climate issues can only grow support for Democratic candidates.</p><p>"I think it's pretty naive to say climate is the key issue for voters. For a lot of voters it really exemplifies so many things that are wrong with the Trump presidency," Deiseroth says.</p><p>So a factor among others. Helpful, but pivotal only in narrow circumstances.</p><p>At the League of Conservations Voters, a progressive environmentalist organization putting a lot of money and effort into the 2020 races, Senior Director of Political Affairs Craig Auster says: "I'll push back that climate change doesn't matter or isn't registering."</p><p>"It's still showing up in several Senate races. It's been playing a role in almost all of them."</p><p>Candidates are still talking about it, he says, pointing to Colorado, Montana, Iowa, and other states where ads are addressing climate and environmental issues. That shows the candidates believe their opponent is vulnerable on the issue or they're strong on it, he says.</p><p>Like others, Auster calls climate a motivator.</p><p>"Climate change matters," he says. "We have proof point after proof point about what's happening, whether it's a hurricane, a superstorm, derechos in Iowa, or wildfires out west.</p><p>"Pre-COVID it was top tier for Democratic voters along with healthcare. If COVID didn't happen I think climate would be a big deal."</p>
- Green New Deal Champion Ed Markey Defeats Joe Kennedy III ... ›
- These Races Will Shape How U.S. Elections Affect Climate Progress ... ›
- Outdoor Brand Patagonia Wants You to 'Vote the A**holes Out ... ›