APPA Continues Its Journey Down the Wrong Path

“I don’t understand what this is designed to accomplish," John Shelk, President and CEO of the Electric Power Supply Association, told Platts in response to the latest effort by the American Public Power Association (APPA) to deny American consumers the economic and environmental benefits of organized competitive electricity markets.

We agree. Trotting out its tired and misleading compilation of Energy Information Administration (EIA) statistics, and continuing to conflate state-regulated retail and federally regulated wholesale power markets, APPA and an assortment of activist groups called on Congress and federal energy regulators to look into allegedly “high electricity prices” in organized electricity markets.

The same Platts report quoting EPSA's Shelk observed that APPA and its fringe allies offered no specifics as to what Congress or FERC ought to do. We respectfully submit that what Congress and regulators should do is examine the facts.

Such as the fact that the EIA has observed that prices in organized competitive electricity markets are expected to continue declining for at least the near term. And the amount of retail load switching to alternative suppliers continues to grow in states that allow retail competition.

And in addition to examining how competition keeps costs as low as possible, any investigation should take note of the fact that competitive electricity markets are driving innovation, and producing the economic and environmental outcomes that consumers want.

The 2009 State of the Markets Report by the ISO/RTO Council found that organized competitive markets are “shattering barriers” for renewable and demand response resources. The Federal Energy Regulatory Commission's discussion draft for a congressionally mandated National Action Plan on Demand Response highlights how demand response has doubled in competitive markets since 2006, and in New England has tripled. “Such an infusion of demand response resources has aided in providing greater grid reliability, mitigation of generation market power, and an overall decline in fuel-adjusted power prices in organized, wholesale markets. Moreover, permitting (aggregators of retail customers) and other curtailment service providers to participate on organized, wholesale markets facilitates greater involvement from customers such as universities, big-box retailers, and residential customers,” the FERC report said.

Last year, nearly 80 percent of a record-breaking amount of installed wind capacity was developed within the footprints of the organized competitive markets. This is no accident. In fact, the Utility Wind Integration Group notes that “well-functioning hour-ahead and day-ahead markets provide the best means of addressing the variability in wind plant output.” This is why utilities in the Midwest – including several municipal utilities – are joining organized markets, and why parties in the West are embracing elements of the organized markets as a means to integrate ever-increasing wind resources.

We all recognize that in today’s troubled economy consumers can have difficulty paying household bills — including their power bill. But fortunately there are many consumer safeguards, such as low-income financial assistance and payment plans to avoid disconnection. Cynically seizing on their misfortune to advance a narrow political objective is perhaps something else Congress and the FERC should take note of as well.

Joel Malina | November 5, 2009