Commissioners from the Federal Energy Regulatory Commission (FERC) expressed their deep concerns over the Democrats’ plans to overhaul America’s electricity grid in their reckless tax and spending spree. Commissioner James Danly said the plan would be like an “H-bomb” for America’s electricity markets. Commissioner Mark Christie warned that consumers in states like Virginia and West Virginia could see huge rate spikes because of the national standards Democrats want to impose. The commissioners were testifying before the Senate Committee on Energy and Natural Resources (ENR) at a committee oversight hearing.
What They Are Saying about Democrats’ Electricity Plan:
RANKING MEMBER BARRASSO: Mr. Danly, today’s Wall Street Journal editorial “Climate Policy Meets Cold Reality.” It’s an op-ed. In it, the author points out that Europe’s rush to renewables is causing prices to spike and energy shortages. So you got both. You have reliability and affordability issues. The author concludes, she says: “Europe offers a portent of the havoc to come under the Biden administration’s policies that aim to shut down fossil fuel production and power the U.S. grid exclusively with renewables.” So if Congress enacts this so-called Clean Electricity Performance Program and it severely restricts natural gas production, as the House Democrats are proposing, will we be headed for higher prices and energy shortages, both?
COMMISSIONER DANLY: Thank you, senator. I think it is almost inevitable. I typically don’t think it’s my role to comment on the legislation before Congress, but in this case I want to be responsive to your question. The markets that we have, which are organized markets, they cover about two-thirds of the population of the United States to deliver their power. These are mechanisms that we have very slowly refined incrementally over the course of decades. The text of the bill, as I read it, seems to create an incentive and penalty structure that would absolutely change and frustrate every subtle expectation we have for these slowly-developed, incrementally-produced markets of ours. Effectively dropping an H-bomb into the middle of them. It will effectively end the markets as being anything other than administrative constructs for the purposes of balancing and dispatch. If you’ll indulge one minute here. Imagine how hard it would be when you get a capacity-supply obligation, which some are three years ahead – three years forward, and you got that supply obligation returned for a payment when the market cleared and your further bids you make in later auctions are then going to have to not only have you figure out what the cost is but also what your competitors who are bidding in – what their new calculus will be. Based on performance metrics that have not even been achieved yet. I can’t imagine how the markets could possibly take that.
RANKING MEMBER BARRASSO: You addressed one of the two comments that the chairman raised at the beginning of the committee on reliability. I want to ask about affordability. Commissioner Christie, what’s going to happen to electric bills of our constituents if Congress forces states to rely almost exclusively on intermittent wind and solar? Won’t this drive up costs especially, as Germany has discovered, that we must have backup natural gas and coal-fired power plants?
COMMISSIONER CHRISTIE: Well, a national standard is of course going to treat different states differently. We have 50 different states. Each one has a different generation mix. Right now, the generation mix is totally under the control of those individual states, so it effects individual states differently. I am very familiar with Virginia because I was a state regulator for seventeen years and I am very familiar with West Virginia because we share jurisdiction with their largest utility. As I said in response to the chairman’s opening, West Virginia is 90 percent coal. If a national standard forces West Virginia to shut down 90 percent of their generation mix, you obviously have a reliability problem. That isn’t hard to figure out. But from a cost standpoint, West Virginians have to pay for replacement power. Paying to replace 90 percent of their generation mix is going to be extremely costly. And also, West Virginia happens to be a vertically integrated cost-to-service state. That means those generating plants that would be forcibly to shut down by a national standard are in rate base and so West Virginia consumers are going to pay for years to come, even though those plants are not running. And the same thing applies to Virginia, my state.