Affordable Renewables—Unjust and Unreasonable?
34 Pages Posted: 8 Dec 2020
Date Written: 2019
The Federal Energy Regulatory Commission (FERC)—an independent agency tasked with ensuring “just and reasonable” energy rates—has begun to use energy market payment systems to prop up fossil fuels. FERC has issued orders that prevent renewables from competing with fossil fuels by forcing renewables to bid into energy markets at artificially high rates. FERC has argued that state clean energy subsidies distort energy markets by “suppressing prices” and pushing “needed” fossil fuel generators out of the market. According to FERC, a federal intervention is necessary to protect “market integrity” and ensure that consumers can access reliable electricity.
This Note argues that FERC’s interventions are neither necessary nor legal. FERC, it seems, is simply intent on counteracting state clean energy policies. This Note shows that FERC’s orders lack any theoretical justification because the markets FERC has developed would retain adequate energy generators to provide reliable electricity without FERC bailing out fossil fuels. In addition, this Note shows FERC’s anti-renewables interventions are arbitrary and capricious in violation of the Administrative Procedures Act. FERC gave an implausible explanation for its order because it claims it is trying to resolve the issue of unjust and unreasonable rates, but its decision exacerbates that problem. FERC’s order makes consumers pay more for electricity unnecessarily. FERC also failed to consider critical aspects of the problem, including (1) reasonable alternatives that did not involve price inflation and (2) the existence of subsidies supporting fossil fuels.
Keywords: FERC, MOPR, energy law, renewables, energy markets, capacity markets, administrative law
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