COMPETE Statement on Release of Synapse Study

The following statement was released today by William Massey, counsel to the COMPETE Coalition and former FERC Commissioner, in response to a study by Synapse Energy Economics on the pending federal climate and energy legislation released this morning by APPA, NARUC, NASUCA and NRECA:

“The issue of  limiting greenhouse gas emissions is too important to wrap neatly in a narrow anti- electricity market focus.  The issue is not profits, but price signals.  There is more than an abundance of evidence that organized markets for electricity offer a superior platform for the market-based cap-and-trade program that Congress is advancing.  

“Consumers will pay the cost of carbon, regardless of whether they are in the two-thirds of the country that benefit from the economic and environmental benefits of organized electricity markets.  But, unlike the monopoly model, consumers in organized markets will see clear price signals that will give them the opportunity to change their consumption habits and support innovative technologies and services that will increase efficiency and bring about  emission reductions that a market-based cap-and-trade program is intended to produce.

“While the majority of those involved in the climate legislation discussion, including policymakers, agree that a market-based approach offers the most effective means of reducing greenhouse gas emissions the study’s sponsors are clinging to the past.  Market-based systems for electricity are already delivering innovation and efficiency in electricity production and consumption. 

“This is why the Environmental Defense Fund is on record urging Congress to recognize the benefits of competitive markets for electricity in support of a market-based climate policy.  In a joint statement with the COMPETE Coalition, the Environmental Defense Fund urged Congress to recognize that ‘the incentives for innovation in new technologies that reduce emissions will be maximized through competitive markets for electricity in conjunction with an economy-wide cap and trade program to limit GHG emissions.'

“The American Wind Energy Association and the Utility Wind Integration Group are on record recognizing the benefits of organized markets in promoting renewable energy.  Organized markets are also promoting the kinds of energy efficiency outcomes that a cap-and trade program is intended to bring about.  Demand response is growing most rapidly in the organized markets.  Just last month, the Energy Department’s Lawrence Berkeley National Laboratory issued a report acknowledging that, ‘Most of the growth in incentive-based DR resources has occurred in organized wholesale markets administered by ISOs/RTOs.’

“Further, the markets are already providing generators the incentive to produce more electricity while emitting less carbon into the atmosphere.   Markets have given generators strong incentives to improve their operating efficiencies (particularly non-CO2 emitting nuclear plants, which prior to competition had an average capacity factor of about 60%; today it is more than 90%).  These facts and the view that  the price signals in  competitive markets for electricity will better enable the outcomes a cap-and-trade program is intended to produce were enumerated in a recent study by Navigant Consulting.

“Markets will bring the benefits of cost efficiency and effectiveness to help achieve the policy goals of federal climate legislation.  Well-structured competitive electricity markets offer the most benefit to consumers, our economy and the environment.”