As if things haven’t become bad enough for the catastrophic anthropogenic global warming crowd in Louisiana, now it has to deal with a Public Service Commission member like a matador waving a red cape in front of a bull.
Last week, Republican Gov. Jeff Landry signed HB 692 by GOP state Rep. Jacob Landry into law. To sum it up, it created anti-renewable portfolio standards for state energy policy. An RPS is a mandate that regulated utilities have a certain mix of renewable fuel sources, which because of the unreliability of wind and solar sources and infinitesimal existing battery power elevates substantially costs for consumers.
Louisiana by law or through regulation issued by the PSC doesn’t have one, although New Orleans, uniquely separately able to regulate power provision within its borders, has a quasi-version that allows for both natural gas and nuclear sources to count as “clean” like a renewable, source, for now. The new law does the same in considering the pair of sources, but it also in demands for reliability pushes providers in the direction of fossil fuel usage.
In essence, the new law dashes any hopes of CAGW enthusiasts from instituting an RPS by PSC regulation or by statute. That doesn’t mean that higher-cost renewable sources can’t be introduced to jack up the end-user price, because all three of the state’s major utilities belong to regional transmission organizations, either the Midcontinent Independent Systems Organization (Entergy, both Louisiana and New Orleans, and Central Louisiana Electric Corporation) or the Southwest Power Pool (Southwestern Electric Power Corporation, a subsidiary of American Electric Power). While Louisiana may not have an RPS, other states that are part of these do and therefore can have the higher costs inserted in their sharing of power.
As well, as a member of an RTO (providers voluntarily join these, not states), the involved firm must submit to and pay for a centralized bureaucracy empowered to force utilities into undesirable but necessary decisions, such as those that led to blackouts in April in northwest Louisiana (SPP) and in May in the New Orleans metropolitan area (MISO). Both have led to investigations by the PSC and New Orleans City Council.
However, now has been floated an idea for providers to save money (which could be directed towards ratepayer relief), get out from under potentially forced blackouts, and avoid higher-cost renewable sources being forced into the system and possibly ending up passed on to ratepayers. Recently, Republican Public Service Commissioner Eric Skrmetta (and a MISO board member) recommended that state utilities abandon RTOs in favor of the Southeast Energy Exchange Market. He identified several problems with sticking with RTOS, including interconnection bottlenecks and poorly coordinated seams that limit generation integration, diffuse governance models and misaligned incentives that render them unable to respond to regional needs with agility or accountability, needlessly high bureaucratic costs, and inability of regulators to issue orders compensating for these shortcomings.
He then upped the ante by publicizing MISO efforts to continue its CAGW-inspired strategy that he pointed out, writ large across the country, was a major contributor to rising utility costs in recent years (and this was true before then as well). RTOs, he argued, had evolved into chokepoints restraining growth of deliverable power in an era where electricity demand is forecast to increase by a sixth in the next few years.
SEEM avoids these problems because it isn’t an RTO, but instead a consortium of providers that agree to sell excess power to others after instant negotiation at essentially zero transaction costs, which trickle down and with no RTO bureaucracy to fund into lower costs for consumers. At present, swaps may occur as little as 15 minutes prior to use, although plans are afoot to change to a day-ahead marketplace.
However, SEEM has been opposed from the start by the CAGW crowd allied with the renewable generation industry. That’s as SEEM members generate almost exclusively from fossil fuel sources and of the 12 states in which SEEM has a footprint only three have current RPS standards in place (and one, Viriginia, barely has a sliver of a SEEM provider in it).
Further, they alleged that SEEM’s organizational structure discourages renewable energy providers from having access to the market, because they would be “participants” and not “members” in wholesale rate setting that created a two-tiered structure. SEEM’s worldview is to create a market for excess generation, which ideally would work great for renewable sources if indeed these were lower-cost. Of course, as wind and solar overall induce higher costs onto consumers, it would be appropriate to have differential rates to compensate for consumers.
The activist Twelfth Circuit Court of Appeals court bought opponents’ argument that SEEM should be reevaluated by the Federal Energy Regulatory Commission as a different classification that would have allowed for membership for all entities and thus give them ability to influence pricing. But this spring, FERC largely reaffirmed SEEM as is with additional safeguards to prevent market pricing manipulation.
SEEM would represent a balancing act. On the one hand, as it isn’t an RTO in times of extreme stress it can’t order rearranging of power provisions to try to prevent brownouts and blackouts. On the other hand, it would allow for state regulatory commissions, which have no control over RTO actions by federal law, to apply various carrots and sticks to discourage if not prevent that from happening. Best of all, as currently structured, very little RPS intrusion could occur on prices, presenting the best chance for Louisianans to enjoy the lowest possible rates and greatest reliability.
The state’s providers can’t be forced into giving MISO and SPP notices to leave and then next year join SEEM, but surely the PSC can provide some kind of incentive (or avoidance of a disincentive) to prompt this. Skrmetta’s suggestion needs to be followed in this fashion, for the promise of lower rates and greater reliability.
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