R Street submits public comments on FERC's proposed changes to PURPA

The energy team over at R Street submitted comments this week to the Federal Energy Regulatory Commission’s (FERC) on proposed changes to the Public Utility Regulatory Policies Act (PURPA) regarding the rules governing qualifying facilities (QF) and longterm purchase agreements in wholesale competitive markets.

Michael Haugh at R Street writes: “Competitive wholesale markets are one of the best ways to provide low cost, efficient power to customers. A recent study by the U.S. Energy Information Association found that between 2008 and 2017, more than 103 gigawatts (“GW”) of renewable generation have come on line, but only 14 GW are certified as a QF. This shows that renewable generation has evolved to become competitive with traditional generation sources. Along with RPS enacted by states, robust wholesale markets have provided stable revenues for renewable generators. Many states hold competitive auctions to procure resources for their RPS requirements, which create a market for renewable generators. These markets limit the necessity for the QF designation and the long-term purchase agreements that come with it. The QF purchase agreements can lead to a suppression of the market in the instance where a QF does not win, or even participate in, a state RPS auction and then requires the state to honor the QF obligation. Situations like these can lead to higher overall costs for the utility customers which, in turn, defeat the purpose of the competitive solicitation.”

Read R Street’s full comments here. The FERC docket number is RM19-15-000. Public comments are due later this month. Further details about FERC’s proposed rulemaking to modernize PURPA is available at FERC.gov.

Happy Thanksgiving

For all of us at the Energy Choice Coalition, happy Thanksgiving!

Opposition Turns to Dirty Tricks as Florida Fight for Energy Choice Heats Up

The push to put retail energy choice on the ballot in Florida has been going on for well over a year. With the 2020 election now officially less than a year away, opposition to the grassroots initiative in the Sunshine State is turning up the heat and turning to dirty tricks to stop Floridians from having their say.

Background

The advocacy group Citizens for Energy Choices has been collecting signatures for months to put the issue of whether Floridians should have the right to choose their power provider and generate and sell electricity on the 2020 ballot.

Energy choice is one of a handful of ballot proposals seeking to amend the state constitution that are currently jockeying for attention in Florida.

The group, Citizens for Energy Choices, is asking voters to approve an amendment that would give electricity customers the right to choose “from multiple providers in competitive wholesale and retail electricity markets, or by producing electricity themselves or in association with others, and shall not be forced to purchase electricity from one provider.”

Proponents say the measure ensures the state’s electricity markets are “fully competitive so that electricity customers are afforded meaningful choices among the wide variety of competing electricity providers.”

Despite opposition from the state’s big investor-owned utilities – Duke Energy and NextEra Energy, which owns Florida Power & Light Co. and Gulf Power Co. – the organizers of the energy choice campaign raised nearly $4 million as of September and collected nearly half a million signatures of the 766,200 needed to qualify for the 2020 ballot. The deadline for qualifying is February 1.

Blocking Tactics

The first big swing from the opposition was an attempt to throw out the potential ballot initiative through the courts. Opponents – including both the Florida House and Senate – argued the initiative language was confusing and misleading. Florida’s Attorney General argued that “voters simply will not be able to understand the true meaning and ramifications of the proposed amendment” during oral arguments before the state’s Supreme Court.

The effort is an attempt to take deny Florida voters the right to have a say on where their energy comes from. On the other side, the chairman of Citizens for Energy Choices, Alex Patton, noted that his group has “far more respect” for voters than the institutions attempting to block the initiative from appearing on the ballot.

““It’s not a secret what we’re really doing,” Jacoby wrote. “We are offering you and your people a higher-paying initiative to ensure that they don’t work for our client’s opposition, which is the utilities initiative.””

— Mark Jacoby with Citizen Voters in the Sun Sentinel, Nov. 22, 2019

Another tactic being employed by opponents of the ballot measure is hiring signature gathers away from Citizens for Energy Choices with the lure of more money and having them sign non-compete clauses.

Attempts by the state’s utility giants and the Florida Chamber of Commerce to thwart the public legislative process have raised questions about whose interests they are serving.

The Florida Supreme Court heard oral arguments in the case challenging the ballot language in late August but has not yet issued its decision.

Misleading Commentary

Allies of the big utilities have taken to the op-ed pages of Florida’s newspapers to challenge the motives of energy choice advocates. The resulting commentaries have attempted to mislead and confuse readers about the intent of the ballot initiative.  

Eric Silagy, CEO of Florida Power & Light, published an op-ed in the Sun Sentinel earlier this year that was rife with misinformation that has repeatedly been debunked time and again. Silagy claimed that “deregulating electricity markets doesn’t work for the party that matters most – residential customers.”

But studies have shown the opposite to be true – the lack of competition leads to higher increases in electricity rates compared to competitive-market states. In fact, rate increases were nearly 20 percent higher from 1997 to 2018 in states without energy choice compared with states with energy choice, and a study on the effect of energy choice in Texas found that average residential electricity prices in deregulated areas declined more than 23 percent between 2008 and 2017, while average residential prices in regulated markets slightly increased during the same period.

In the op-ed, Silagy argues that FP&L’s customers pay, on average, nearly 20 percent less than residential customers in Texas, and cites a June 2019 report from the Energy Information Administration to back up his claim. He goes on to say that FP&L customers pay less than every single deregulated market in the United States. This claim is wrong and overlooks the benefits of geography that Florida utilities enjoy.

According to the EIA, more than 60 percent of the price of power comes from generation, a majority of which is fuel costs and the costs to operate and maintain generating facilities. These costs exist for power providers regardless of whether they are in a state with energy choice or not. Florida benefits from low fuel costs, and that is responsible for the lower-than-average prices more than anything else. Advocates for energy choice maintain that customers would see even lower prices in a competitive market. 

Silagy goes on to argue that reorganizing Florida’s electricity market would threaten the state’s progress on adopting cleaner sources of energy. This point is particularly deceptive as the chairman of Citizens for Energy Choice has pointed out. The adoption of cleaner energy sources by Florida’s incumbent utilities is a result of consumer demand and the push to open the market to more competition. Without the threat of competition or, more costly, a government mandate, it’s unlikely the utility giants would be building renewable energy facilities.  

Silagy’s commentary was just one of the misleading pieces published in recent months. Other attempts to dissuade voters from adopting competitive market reforms include articles by Tallahassee Commissioner Gil Ziffer, a former member of Florida House of Representatives Joseph Gibbons, and the political advocacy group FARE. 

To say there’s a full-court press to dissuade Florida voters from embracing competition would be an understatement. 

Attempts to Get Ballot Signers to Revoke Their Signatures

Readership of local newspapers being what it is these days, it’s no surprise that opponents of the ballot measure have begun targeting voters directly.

As reported by the Miami Herald, a political action committee backed by two Miami political consultants with ties to Florida Power & Light, Floridians for Truth, this fall sent an eight-page letter to Florida residents who signed the petition to get the constitutional amendment on the ballot urging them to not only oppose the proposal but to rescind their petition signatures.

The move would appear to be a waste of money since Florida does not permit someone to remove their signature once they’ve signed a petition, however, the letter indicates that its real intention is to gather counter signatures to present to the state’s Supreme Court in the legal fight to try to get the ballot initiative disqualified.

The mailer claims voters who supported the amendment language were being “duped” and “swindled,” but a poll conducted by St. Pete Polls found that roughly two-thirds of voters supported the energy choice language.

Punishing Those Who Support Energy Choice

When persuasion doesn’t work, try punishment. That appears to be the thinking of those opposed to competition in Florida.

According to an the Miami Herald, Florida Power & Light was planning to roll out its “SolarTogether” program, which would have allowed customers to purchase renewable energy from the incumbent utility. The plan was scuttled after a video recording of an internal meeting showed that the utility intended to limit participation to only customers it deemed as being loyal.

“The original proposal, filed March 13, included an exclusionary penalty for customers who do not support the “continuity of the program,” specifically those who support deregulation efforts like the Citizens for Energy Choices ballot initiative, according to Public Service Commission documents and video recordings of a public meeting obtained by the Miami Herald.”

— Miami Herald, July 3, 2019

In translation, that means residents who supported the energy choice amendment effort would not be eligible for the program. The program’s unique eligibility requirements were dropped after reporters started asking questions of Florida Power & Light executive.

Likely to Get Worse Before it Gets Better

There’s nothing new about entrenched special interests spending a small fortune to protect their monopoly status. Opponents of competition spent about $63 million to defeat an energy choice ballot initiative in Nevada last year.

While political spending is good for the owners of media companies and the consultants who direct it, all those mailers and online ads can be downright annoying to the regular voter. The situation is likely to get worse before it gets better, though. Proponents of the Florida ballot initiative have until Feb. 1 to gather the required signatures.

Opponents of competition have demonstrated that they are willing to do almost anything to keep the language off the ballot and let voters decide the issue. There’s no reason to expect the dirty tricks and disinformation about the benefits of competition to stop before the deadline.

If Citizens for Energy Choices is successful in gathering the necessary signatures – and the state Supreme Court approves the ballot language – then Florida voters should expect the current fight to last all the way up to Election Day. Whoever said “freedom isn’t free” wasn’t kidding.

Competition Has Delivered Cleaner Energy And A Healthier Environment For New York State Residents

The New York Public Service Commission’s tighter limits on the activities of independent energy service providers threaten to undermine a robust competitive residential energy market that has delivered cleaner energy and a healthier environment despite declining complaint rates. 

In 2016, the New York Public Service Commission prohibited most independent energy service companies (ESCOs) from selling electricity and natural gas to low-income customers unless they can guarantee savings.

The change requires service providers to guarantee their customers won’t pay more than buyers who stick with their incumbent utility. There’s an exception for electricity generated from renewable energy, however, with the added stipulation that at least 30 percent of the power comes from renewable sources. 

The Commission argues that the restrictions are necessary because many ESCOs have been overcharging customers and using high-pressure and deceptive sales tactics that target low-income and other vulnerable populations. If the Commission determines a service provider has engaged in deceptive practices or overcharged, its low-income customers are reconnected to their local utility. 

Service providers challenged the market restrictions to the state Supreme Court. But this past summer, the high court upheld the Commission’s authority to protect consumers from being overcharged.

 The Public Service Commission deserves credit for seeking to improve protections for consumers, especially for low-income households who can least afford unexpected increases in energy costs. Unfortunately, instead of protecting consumers from deceptive marketing or overcharging, the new rules threaten to push third-party service providers out of the market, leaving consumers with fewer options for clean energy. 

Independent service providers have been central to New York’s efforts to transition to a lower-carbon power grid by encouraging energy efficiency improvements and responding to consumer calls for more renewable energy generation. 

Mandating price guarantees distorts the benefits of a competitive market. It exposes service providers to risks when costs increase suddenly and artificially, and to consumers who can be overcharged when market-conditions cause prices to drop suddenly. 

Regulators are not able to respond quickly enough to fluctuations in market prices to mitigate those risks. A properly functioning market based on supply and demand is far more efficient at determining the true cost of electricity than government regulators. Independent service companies provide fixed-price hedging alternatives to the local utilities’ variable pricing, which places the risk of price fluctuations on the service provider where it belongs instead of on consumers.

 The Public Service Commission’s assumption that customers are being overcharged is also based on faulty data analysis. Complaints against service providers have fallen since 2016. New York customers filed 468 complaints about deceptive marketing practices and advertising in 2017 compared to 257 claims in 2018 – a decrease of 45 percent, according to Commission data. Initial complaints against service providers also declined significantly, from 2,195 in 2017 to 1,684 in 2018.

 The number of new complaints filed this past June fell to the lowest level since 2011, according to the Commission. Initial claims in June totaled 79 compared to 103 in the same month the previous year. Of those, only 16 complaints were deemed severe enough to be escalated compared to 28 for June 2018. 

In every market, there will, unfortunately, be a few bad actors. But the statistics show that existing rules and the ability of consumers to switch providers, which is inherent in a competitive market’s design, are working. 

New Yorkers can and should be able to choose the energy products that work best for them and their families. Efforts to restrict the number of companies participating in the open market, however, reduces the effectiveness of competition.

Independent service providers understand they must deliver services that consumers want at prices that are competitive, or else their customers will choose a different provider. Rules that restrict the number of competitors in the market limit the ability of consumers to vote with their feet. 

Instead of limiting the ability of service providers to compete, consumers would be better served by an update to the state’s Power to Choose website, which allows comparison shopping between the services of hundreds of independent providers and incumbent utilities. Ensuring the website’s pricing information is accurate would go a long way to improving consumer satisfaction with the market. 

The Commission should also focus on getting bad actors out of the market by insisting on price transparency and the right of consumers to change service providers with minimal notice and without financial penalty. Variable pricing offers should be clearly labeled, so consumers understand what rates will be once any initial limited-time price offer ends. Energy brokers should also be required to disclose hidden fees that can be rolled up into the price consumers pay.

After 15 years of competitive markets, New York residents have the benefit of choosing among approximately 200 energy service providers. Independent service providers have proven that a market exists for cleaner energy and energy efficiency. Competition has benefited New York in terms of a cleaner and healthier environment, as well as lowering the amount consumers pay for electricity. It has also made New York’s power system more flexible and able to respond to spikes in energy usage during extreme weather. Those are benefits regulators should preserve. 

Protecting consumers from deceptive marketing practices is a laudable goal. The New York Public Service Commission should make sure that in strengthening consumer protections, it doesn’t unintentionally limit their energy freedom. 

Declaration on Energy Choice & Competition

A Civil Society Call for All Leaders of Governments, States & Nations to Remove Barriers to Affordable, Reliable, and Clean Energy

An international group of civic leaders gathered in New York City this week to sign a Declaration on Energy Choice and Competition on the sidelines of the Atlas Network’s 2019 Liberty Forum.

The declaration is the brain child of Julian Morris and Adrian Moore of Reason Foundation, Guillermo Peña Panting of Honduras’ Fundación Eléutera, Rod Richardson of the Clean Capitalist Leadership Council, and the Energy Choice Coalition.

The group unveiled the document in support of broadening energy freedom around the world on the eve of the Atlas gathering, an annual networking event of international think tanks and civil society organizations dedicated to individual freedom and removing barriers to human flourishing.

The civil society declaration calls upon world leaders to commit to removing barriers to competition in energy markets to increase opportunities for renewable energy, efficiency, and innovation. Organizers of the project are encouraging people to sign the declaration ahead of  next month’s UN climate change conference, where they plan to submit it to world leaders.

“In order to improve access to clean, reliable, affordable energy for all, and thereby reduce harmful air pollution, improve access to clean water and sanitation, reduce disease, improve productivity, and enable more rapid innovation and economic development, as well as more rapid and effective mitigation of and adaptation to climate change risks, we now call upon leaders of all governments, states and nations to commit substantially to reduce, within and between nations, not only government-sanctioned barriers to choice and competition in energy markets, but also similar barriers to cleaner and more efficient products and energy innovations.”

— Declaration on Energy Choice and Competition

The declaration calls access to clean, reliable, affordable energy a human right and argues that energy choice and competition in energy generation, transmission, and distribution are necessary for human advancement.

The authors point out that over 800 million people around the world currently have no access to electricity and many more lack access to reliable electricity. Improving access to clean, reliable, and affordable energy is best achieved through maximizing consumer choice and competition within local power markets, they argue.  

Choice and competition drive innovation, as producers strive to deliver better quality at lower prices. To lower costs, producers reduce inputs, such as energy. Over time, this dynamic has driven a trend toward lower carbon emissions per unit of output. More so in competitive power markets, as found in Texas, the United Kingdom, Chile, Sweden, Norway, Denmark, and Finland, according to the authors of the declaration.

Studies show competitive U.S. state markets have delivered faster decarbonization at a lower cost, compared to monopoly markets, since 1997. These results make sense, because innovations spread faster, and policy incentives work better, if markets are open, not closed.

Richardson of the Clean Capitalist Coalition describes the declaration as an international collaborative effort between both organizations and individuals, and said efforts to advance energy choice and competition will be aided greatly if local, state, and national leaders unite in commitment to energy market freedoms.

Sign the Declaration on Energy Choice and Competition here.

The latest cartoon from Ken Catalino

We’re still in a Halloween mood here at the Energy Choice Coalition. We also find the idea of mandatory blackouts in California very, very frightening.

PG&E Monopoly is not Good for Customers or Forests

Last week was not a good week to live in California, especially for the astonishing 800,000 people who lost power. For the unlucky ones who had less than 24 hours’ notice, it was an exceptionally bad week. A blackout would be bad enough, but it was especially egregious given that the power outages were deliberately caused by the state’s biggest monopoly utility, Pacific Gas & Electric (PG&E), in an attempt to reduce the risk of its infrastructure sparking another wildfire.

Unsurprisingly, the sudden blackouts did not go down well with consumers. Without sufficient notice – PG&E even knocked out its own website making communicating with its customers all the more difficult – traffic lights went out; hospitals, police stations, and fire stations weren’t prepared; and up to $200 million dollars’ worth of food rotted. All because of bad planning and a misuse of funds. Just this morning, the CEO of PG&E said that the blackouts will have to occur for the next ten years.

The California fire season is getting worse every year, in part because of rising temperatures and shrinking rainfall, but also due to California’s refusal to actively manage its forests by thinning tree growth, ground brush and other fuels. Fires aren’t being fought the way they should be, and because of California’s housing crisis and high property values, more people are moving into fire-prone land.  

Fire is a natural part of the lifecycle of a healthy forest. As a forest matures, fuel sources build up on the forest floor and tree growth becomes denser making it more prone to fire caused by lightning or other causes. Naturally occurring wildfires regularly reduce the amount of fuel and keep it from building up. But in California and many other places, small wildfires have not been allowed to occur, nor has the local government gone in and cut trees and cleared brush. This has left our forests in an unnatural state and vulnerable to major fires because of the amount of available fuel.

PG&E knew this, and yet for years dragged its feet on updating aging infrastructure, preferring instead to line their investors’ pockets,  donate to political campaigns friendly to them, and cozy up with regulators. Rates went up for customers, ostensibly to update infrastructure, but very little was actually done. It was an outdated PG&E tower that caused last year’s deadly Camp Fire, prompting a class-action lawsuit that has pushed the monopoly utility into bankruptcy court.  

That wasn’t the first lawsuit either: the company was fined $3 million in 2010 for covering up a pipeline explosion,  and this year the courts said PG&E violated its probation. If PG&E were a politician instead of a government-created monopoly, the attack ads would write themselves.

A California bankruptcy judge has decided that PG&E – the state’s largest utility with 40 percent of ratepayers – cannot be trusted to write its own restructuring plan. What’s next for California electricity customers remains an open question. Will PG&E emerge from Chapter 11 bankruptcy as a vertically integrated utility?

One thing is for sure, more and more customers are saying they want greater local control over where they get their power. Municipal-run Community Choice Aggregation (CCAs) are popping up all over PG&E territory. We think California should go further by increasing competition in the retail sector.

California allows limited electricity choice for residential customers, but it should do more to increase direct access to competitively priced electricity for consumers. Competition will bring efficiency and innovation to the electricity market. Letting the private sector compete to generate electricity and provide ancillary services will free up incumbent utilities to focus on improving the distribution infrastructure. California’s crumbling power lines aren’t going to fix themselves.

Just in Time for Halloween: Grid Resiliency Docket Returns at FERC

Bloomberg is reporting that FERC Chairman Neil Chatterjee told reporters after today’s FERC meeting that the commission plans to revive action on grid resilience “sooner rather than later.”

“I have always said we will do a careful, thoughtful, data-based, scientific examination of our record:” Chatterjee told reporters, according to Bloomberg. His comments come on the heels of a letter-writing campaign from utility commissioners from six coal states - Alabama, Kentucky, Montana, Tennessee, West Virginia and Wyoming - raising concerns about the increasing number of coal plant closures “bringing increased attention to grid resilience and fuel security.” The letters call on FERC to finalize its review of the electricity grid and consider imposing rules to reduce closure of fossil-fuel power plants.