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EPSA STATEMENT ON ORGANIZED MARKETS COMPLAINT
WASHINGTON, D.C. - John E. Shelk, president and CEO of the Electric Power Supply Association (EPSA) today issued the following statement concerning the complaint filed today at the Federal Energy Regulatory Commission (FERC) on wholesale electricity prices:
"EPSA looks forward to reviewing the pleading filed today. As we begin a new year in a matter of days, the focus should be on the future. EPSA and its members continue to be committed to practical solutions to serious issues. Competitive power producers are focusing on the need for cleaner air, efficient use of our energy resources, and affordable and reliable energy. Competitive markets are spurring investment in renewable energy, demand response and rising to meet the complex challenges of growing demand for the many uses of electricity. In contrast, those filing this pleading have been long on complaints for several years now, but short on meaningful and realistic solutions. We look forward to learning whether any such solutions are being put forward today or whether it is more of the same.
It is widely accepted that the nation requires a minimum of $800 billion in investments in its electricity infrastructure in coming decades, starting now. This will be necessary just to keep the lights on as the nation's demand for electricity increases. Projected costs will double to $1.5 trillion or more as low carbon technologies are deployed to address climate change concerns. Whether in organized markets that serve two-thirds of the country's consumers, or in those areas without the benefits of regional transmission organizations, these investments require clear rules of the road that permit investors to make long term decisions. Complaints of this kind only increase the uncertainty that hinders timely investment, making matters more difficult.
The emphasis only on markets run by independent regional transmission organizations (RTOs) is misplaced. FERC's own data, reaffirmed by the reports of independent RTO market monitors, confirms that today's prices are insufficient to justify the costs of a new natural gas-fired peaking plant, much less the much larger amounts required for lower carbon base load power plants. The nation simply cannot escape the reality of the enormous task ahead. Consumers are ill-served by those who claim these investments can be made at little or no cost - whether in an RTO region or in states without them. Recent price increases in both types of structures of about the same proportion prove this to be correct.
When it comes to price increases, it is not lost on EPSA that those industrial groups signing on to this pleading are themselves responsible for much higher price increases for the steel, chemicals, cement and other inputs that competitive suppliers and traditional utilities must pay to maintain existing facilities and build new ones. It is well documented that these skyrocketing components of new construction costs are a major driver behind the rising estimates for new power plant costs around the country, with a number of plant cancellations outside of RTOs attributable to these increases. EPSA looks forward to learning how these industries propose to reduce their prices to help make new electricity investments less costly.
To its credit, FERC is already moving forward on a bipartisan basis in both RTO markets and those without them to fulfill its important responsibilities under the Federal Power Act. EPSA reiterates its focus on the realities of the future investments that are long overdue and the steps necessary to accelerate them in order to achieve a low carbon future. I call on other stakeholders to get real and do the same."
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Percent Change in Average Electricity Prices in RTO and Non-RTO Markets
Change in Total Average Electricity Prices and Other Commodities (1997-2007)
EPSA Statement on Organized Markets Complaint Dec 07.pdf
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.