Dive Brief:
- In testimony before a House of Representatives Energy and Commerce Committee subcommittee, commissioners of the Federal Energy Regulatory Commission (FERC) largely agreed the shift in energy markets that will be caused by proposed EPA emissions reductions could result in “a complete redesign” of electricity markets but that “the need for FERC to change the generation dispatch order under the Federal Power Act” will depend on how states design compliance and how grid operators implement it.
- Republican Commissioners Philip Moeller and Tony Clark expressed concern that markets would move toward a de facto carbon fee and pointed out that FERC has already allowed legally incurred costs from locally imposed taxes and cap-and-trade programs.
- Acting Chair Cheryl LaFleur, a Democrat, agreed but said the EPA plan gives states flexibility in compliance so that conclusions about electricity market responses are premature, and added that markets have integrated state and regional environmental requirements without cost or reliability compromises, while Democratic Commissioner John Norris noted that California's cap-and-trade program had not caused market or dispatch disruptions.
Dive Insight:
The FERC commissioners reported little interaction with EPA about the emissions reduction proposal, with six staff meetings, one meeting with acting Chair LaFleur, and none with the other commissioners. FERC staff is reviewing EPA's grid reliability analysis and has not yet started its own analyses.
An independent analyst said EPA did not do “appropriate outreach” to regulators and left unanswered the question of what a federal plan would be if a state doesn't submit one.
Clark and Moeller expressed doubt about U.S. infrastructure being robust enough to respond to a shift to more natural gas and renewables but LaFleur, Norris and the just nominated Norman Bay agreed EPA has allowed sufficient time to prepare.
