FERC’s Glick urges broader commission look at capacity markets, states’ rights
The Federal Energy Regulatory Commission must revisit mandatory capacity markets and how regions ensure resource adequacy or risk putting in peril the future of regional transmission organizations, FERC Commissioner Richard Glick told state officials in an address that was highly critical of recent agency actions that could undermine state sovereignty over the generation mix.
FERC in December directed sweeping changes to the PJM Interconnection’s capacity market and in 2018 approved ISO New England’s move to a two-stage capacity auction process. Both efforts aimed to address states’ out-of-market resource procurement actions while preserving competitive market prices and have drawn criticism for purportedly disadvantaging renewable energy resources and frustrating state clean energy policies.
“FERC needs to accommodate state policies, not override them,” Glick said Feb. 5 at the National Association of State Energy Officials’ 2020 Energy Policy Outlook Conference.
“There are certain conflicts and I understand the concerns some of the generators make, but in large part, generators wouldn’t have as many concerns if prices were a little higher, right,” Glick sarcastically asked. He suggested that generators face much larger issues, such as reduced energy market revenues brought on by the low cost of natural gas and the rapid growth of zero-marginal-cost generation from wind and solar.
The sole sitting Democratic FERC member, Glick has been a vocal opponent of the agency majority’s view that state-subsidized resources are given an unfair advantage in the wholesale markets and should be subjected to minimum offer price rules that force them to bid into the market at higher prices.
The Federal Power Act, Glick insisted, was very clear in granting states jurisdiction of resource decision making, and many states are using that authority to address greenhouse gas emissions, an externality in the competitive power markets. “Since the federal government at this point doesn’t have a program addressing [greenhouse gas] emissions, it shouldn’t be for us to say the states can’t either,” the commissioner maintained.
Glick added that PJM, ISO New England, and the New York ISO, the three grid operators with mandatory capacity markets, were constantly coming to FERC with proposals changing how various issues are dealt with in those markets.
Further, “we’re telling almost every entity bidding in [the capacity markets] what they can bid in at, whether it’s because of state policies, market power, or various curves,” Glick said. “We’re micro-managing every aspect of the capacity markets. This is managed competition, which makes managed competition healthcare look like a small thing.”
