Competition is more important than ever to meet today’s energy challenges
As we commemorate another Earth Day in April, the challenges facing our energy systems and the environment seem more pressing than ever. Americans face continued economic uncertainty from the COVID-19 pandemic and rising inflation. Recent disruptions to the power grid have us questioning the reliability of our electrical service. The global conflict highlights the critical need for a steady supply of power generation resources. And we never lose sight of the need to constantly innovate and find cost-effective and sustainable approaches to reducing the emissions that contribute to climate change in our economy. We are at a crucial point, where the decisions taken today by policymakers, network operators, regulators and industry will determine whether competitive electricity markets can continue to achieve the progress they have made. over nearly three decades.
This year, the Electric Power Supply Association (EPSA) celebrates its 25th anniversary of advocating for a fully competitive electrical industry and encouraging and expanding the development of competitive electricity markets. Since our inception, electricity competition has enabled progress that even early champions of opening electricity markets may not have envisioned, paving the way for cost savings, efficiencies , greater reliability, significant decarbonization and rapid adoption of new, cleaner power generation technologies. Competition and restructured markets have also freed captive ratepayers from the burden of paying for investments, construction, operation and shutdowns of new power plants, shifting investment risk to private companies and shareholders.
We believe that the policies we have consistently advocated for and the solutions our member companies have provided can provide a sustainable, sustainable and cost-effective path to cleaner, more reliable electricity. Today we have seen regions with access to competitive markets benefit from low carbon emissions; accelerated introduction of new, cleaner and more cost-effective technologies; and greater reliability provided by the ability to pool energy resources and the economic incentive for electricity generators to operate when needed. And EPSA member companies have brought new, cleaner, cost-competitive technology to the grid while retaining the resources needed to ensure reliability, including more efficient peaking natural gas production and the largest battery storage in the world.
Americans – and our country’s leaders – understand the power of competition. In a poll conducted for EPSA by Morning Consult, 64% of American adults said they support competitive electricity markets, with three-fifths saying they oppose monopoly control of the electric supply chain. And President Biden reiterated in his State of the Union address that competition is key to driving down costs for homes and businesses.
But realizing this vision requires policymakers, network operators, advocates, and industry stakeholders to accept key truths. America’s energy transition must not jeopardize reliability, and Americans must not be forced to incur unnecessary costs in the pursuit of a carbon-free grid. As in all aspects of life and policy-making, balance is essential.
It is important to note that natural gas will continue to be an indispensable source of reliable, flexible and firm power generation for decades to come. This fact has been highlighted in several studies, including a 2020 analysis by Energy and Environmental Economics Inc. (E3), which shows that 50 GW to 90 GW of firm and flexible natural gas generation will be required to maintain reliability. of the system in the PJM interconnect. until 2045, even under deep decarbonization scenarios. America’s competitive electricity providers simply cannot do their most important job – providing reliable electricity – without access to this critical resource.
A recent Pew Research Center poll found that Americans, on a bipartisan basis, understand the need to keep all resources on the table even as they hope for a cleaner future – with two-thirds of poll respondents saying states States should use a mix of fossil fuels and renewable energy. Seventy percent fear that a transition to renewable energy could cause unexpected problems for the country, including higher costs, economic strains and reliability issues.
Energy is too central, not only to our way of life, but also to public health and safety, to put it at risk. That’s why EPSA will continue to advocate at all levels – from the White House to the Federal Energy Regulatory Commission to regional transmission operator stakeholder processes and state utility commissions – to policies that enable our members to do their job. Energy industry watchers are well aware of the pitfalls that arise when competition is undermined – from state political scandals that blame taxpayers for billions of dollars in subsidy payments to exorbitant cost overruns and construction delays that end up hurting customers. Yet, over the past two years, we have seen a troubling momentum for approaches that undermine the integrity of competitive markets, promote taxpayer-funded out-of-market subsidies, and threaten the ability of competitive power generators to invest. in the resources and to maintain them. necessary for reliability.
Our energy future is not all or nothing. It doesn’t require banning resources, bankrupting Americans, or giving up on reducing carbon emissions. Competitive markets – and competitive policies such as carbon pricing – are a proven path to what I like to call the triple win: reliable, affordable and cleaner energy. In the major policy and market design issues on the table today – and those to come – we urge policy makers to choose the competitive, reliable and profitable way forward.
—Todd Snitchler is President and CEO of the Electric Power Supply Association.