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Energy security abroad starts at home

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Electric power transmission, May 20, 2021.

Last week, U.S. Energy Secretary Jennifer Granholm highlighted an essential truth about transitioning to cleaner energy while keeping America’s energy future secure: the two priorities are not a “binary choice.” At the Electric Power Supply Association (EPSA), which represents U.S. competitive power generators, we agree. With the right policy, both energy security and a cleaner power system can be advanced simultaneously. But an absolutist stance in pursuit of one priority that neglects the reality of what the grid needs to operate reliably now, and well into the future, risks jeopardizing what Americans in recent polling by Morning Consult for EPSA say are their top two energy policy priorities: reliability and affordability.

President Biden and his administration recognize the role natural gas will play in mitigating Europe’s energy crunch. But domestic rhetoric and decisions over the past two years too often have ignored the realities of operating the nation’s grid reliably and keeping power affordable for all Americans, while also meeting global energy demand. We support the administration, and federal energy regulators, applying that “both/and,” not the “either/or,” approach when it comes to our domestic needs as well.

As the U.S. looks to send natural gas resources abroad to support our European allies, it will be increasingly critical that our domestic policies allow investment in necessary infrastructure and supply. This urgent new need comes on top of existing pressures to the power grid posed by weather events, increased demand, and the need for firm, flexible resources such as natural gas to back up intermittent renewables. Research shows that a more electrified economy will require additional power generation. For example, 50-90 GW of new natural gas generation will be needed to support decarbonization in PJM Interconnection alone through 2050. 

EPSA long has called for approaches that allow competitive power suppliers to deliver the triple win: electricity that is reliable, affordable and cleaner. Competitive power suppliers in organized wholesale power markets have led the adoption of cheaper and cleaner resources and technologies — while keeping reliable power generation their top priority. That includes building and investing in thousands of megawatts of renewable electricity and some of the largest battery storage projects in the world, while also having rapidly transitioned their fleet from coal to efficient natural gas generation.

The data surrounding competitive power markets point to the ability to deliver on all priorities. Emissions have declined faster in areas governed by competitive markets than in those still relying on a vertically integrated monopoly utility model. Market forces have exerted downward pressure on prices over their more than 20-year history, with $3 billion to $4 billion in annual savings created for consumers in PJM Interconnection alone, the nation’s largest competitive power market. And throughout, power generators have provided a reliable supply of electricity — made more dependable by grid operators’ ability to plan and call on resources across a broad geographic area.

But to keep building on that success, we need to keep moving forward. Competitive power markets across the country, from the Mid-Atlantic to California, are locked in a fierce debate over how to best craft market rules and policies. These pressures have threatened the ability of the markets to send proper signals to inform power providers about what investment decisions to make around retiring and building new resources, putting reliability, efficiency and affordability at risk. Meanwhile, the Federal Energy Regulatory Commission (FERC) has made several decisions that further undermine market integrity and the development of critical infrastructure needed by power generators.

FERC was recently pressured to revisit two policy statements surrounding natural gas infrastructure following outcry from multiple stakeholders including industry and Congress. We are glad to see the commission open the door to more input and consideration. We hope to see a continued focus on reliability and affordability from energy regulators and the administration.

With inflation, recovery from the impacts of the COVID-19 pandemic, and the stress of uncertainty abroad, Americans have enough to worry about. It’s our job — and the job of policy leaders — to make sure that we deliver on all their priorities: reliable, affordable and cleaner power generation that keeps the lights on, homes warm in winter and cool in summer, and the economy humming.

Todd Snitchler is president and CEO of the Electric Power Supply Association. He is the former chair of the Public Utilities Commission of Ohio and a former member of the Ohio State Legislature.

Tags Electric grid electric grid energy costs Federal Energy Regulatory Commission Jennifer Granholm Joe Biden power generation

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