|
|
|
|
|
Different Tune: Pennsylvania PUC Chair Cites "Reliability," "Jobs" Concerns from Plant Closure, Validating Other States' Long-Term Contracting; Capacity Owner Cites Market "Dysfunction" in PJM
Testifying before a state senate hearing, Pennsylvania PUC Chairman Robert Powelson expressed concerns with the impact on "reliability" and "jobs" from the planned closure of two FirstEnergy Generation power plants in Pennsylvania, validating concerns expressed by other state regulators who have entered into long-term capacity contracts to address such concerns.
Specifically, Powelson was testifying regarding the retirement of FirstEnergy's Hatfield's Ferry and Mitchell plants.
"We have to, in terms of just proper and due diligence, look at reliability, which is our main priority, keeping the lights on and more importantly addressing the potential impact on the local community," Powelson said.
According to a PUC press release, "Powelson emphasized that the PUC's interest in this matter is by no means an attempt to exercise any regulatory authority over FirstEnergy with respect to these plant closures. The PUC strongly supports the restructured electricity market in Pennsylvania and understands it is not our place to make managerial decisions for wholesale electric generation suppliers in our state."
"However, in a situation like this, where FirstEnergy's plant closures will potentially affect overall grid reliability, it is the PUC's responsibility to ask some hard questions," the PUC said in the news release
"I think at the end of the day one of the key concerns is the potential loss of jobs in the Commonwealth," Powelson said.
While Powelson said that the PUC is not trying to interfere in the competitive markets, simply acknowledging the reliability and jobs impact regarding capacity retirements validates the action of neighboring state regulators, in Maryland and New Jersey, who have taken different approaches, such as long-term capacity contracts, to address these same concerns. Pennsylvania has repudiated these capacity contracts before FERC, but now that its own state is facing the same issues, it is singing a different tune.
While we stress Powelson is not advocating for any non-market solution specifically, that is not the point. The point is that Powelson has validated economic development and reliability impacts as justifiable concerns that motivate state regulators to take actions in the face of what state regulators consider a failure of the PJM capacity market.
Long-term capacity contracts are not "gaming" the capacity market, as has been alleged by capacity owners, but rather the manifestation of the same concerns expressed by Chairman Powelson.
For its part, FirstEnergy Generation said that the retirements result from a "dysfunction" in the competitive capacity and energy markets in PJM which do not allow for full cost recovery of the plants. PJM has said, however, that the plants may be needed for reliability on super-peak days, yet the plants did not clear the most recent capacity auction.
This again shows that, even if it is conceded that some form of support is needed to meet a mandated reserve margin, the current, centralized, single-clearing price capacity auctions are not an effective way to maintain the sought reliability, because the capacity markets funnel the majority of revenues to plants that are already economic, and leave marginal plants facing the same issues as if there were no capacity market.
ADVERTISEMENT Search for more retail energy careers: Copyright 2010-
September 16, 2013
Email This Story
Copyright 2010-13 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
NEW Jobs on RetailEnergyJobs.com:
• NEW! -- Director of Operations & Compliance
• NEW! -- Inside Sales Representative -- ESCO -- NY
• NEW! -- Director of National Accounts -- DFW
• NEW! -- Energy Advisor -- DFW
• NEW! --Operations Manager -- DFW
• NEW! -- Marketing Coordinator -- Retail Supplier
• Risk Manager -- Retail Provider -- Houston
• Sales Associate -- Houston
• Pricing Desk Analyst
RetailEnergyJobs.com
|
|
|
|