Energy Subcommittee holds first hearing in series reviewing electricity markets
The House Energy Subcommittee began this week a long-term review of the generation, distribution and consumption of energy in the United States with the first of many fact-finding hearings investigating the electricity market.
Dubbed the “Powering America” series, the hearings are meant to inform members about the evolving details of the electric grid as technological innovation and market competition drive change. The first meeting included statements from industry officials regarding current issues they face and developments they have made.
“The nation’s electricity industry and system is undergoing a significant period of transformation,” Chairman
Fred Upton (R-MI) said. “This transformation is affecting the composition of the country’s electricity generation mix, the way industry and regulators are approaching grid reliability, and how federal energy policies are interacting with state policies.”
Witnesses for the hearing included Joseph Kelliher, executive vice president of NextEra Energy, Inc.; Tamara Linde, executive vice president and general counsel at the Public Service Enterprise Group; and Steven Schleimer, senior vice president of government and regulatory affairs at Calpine Corporation.
Regulation of decreasing valuation of nuclear plants, as well as competing thoughts on industry competitiveness were both discussed. Kelliher claimed electricity markets are quite competitive at the moment, while Schleimer painted a portrait of competition being stifled by state efforts to subsidize certain generation.
“U.S. electricity markets are undergoing a fundamental transition driven primarily by economics, the result of low cost natural gas produced by the shale gas revolution combined with increased energy efficiency, lower demand growth, and low wholesale power prices,” Kelliher said, noting that the markets are working well.
Linde focused on PSEG’s baseload nuclear plants, however, stating that regulatory costs imposed on nuclear plant operators, increased prevalence of renewable and demand-side resources and regulatory efforts like net-metering were causing such plants to be undervalued and compensated.
Schleimer, on the other hand, said, “A hybrid model, where states subsidize some generation but leave the remaining generation to rely on the market for their revenue, is unsustainable. A coordinated effort is needed between all the states, FERC, and market participants to develop solutions that allow states to pursue their policy goals while protecting the wholesale markets. Such an effort will require leadership and commitment to competitive markets, but if we have both, we will be able to develop solutions that ensure the continued viability of these markets.”
