Opening Remarks of Commissioner Neil Chatterjee
Technical Conference Regarding Resource Adequacy in the Evolving Electricity Sector
March 23, 2021
Good morning and thank you, Mr. Chairman. I’m pleased to be part of this conference today. I appreciate the time and effort our panelists have put into preparing for this conversation, and I’m really looking forward to hearing from everyone. And of course I want to extend my thanks to David and the rest of the staff team who have taken on this challenge and done the work to get us here today.
We’ve all come here to talk, once again, about the issues that arise at the intersection of state policies and the competitive wholesale markets we oversee. These issues are neither new nor easily navigated. This agency, the states that are part of the Eastern RTO footprints, market participants, and stakeholders have continually wrestled with these issues since the centralized capacity markets took shape.
And we’ve all wrestled with it because the stakes are high. Keeping the lights on is job one. What we’ve seen in Texas and California highlights for me the need to think holistically about resource adequacy and reliability, the market structures that underpin them, and the policies that certain states have enacted to accelerate the changing resource mix.
I know we have a lot to cover today, so I just want to make three points before I turn it back to Chairman Glick and my colleagues.
Number one: I want to be clear from the jump that I’m here with an open mind and an eye toward shaping what’s next. Since I’ve been at FERC, we’ve made some tough and frankly controversial calls affecting our markets. My priorities have been clear though, whether it be in Orders 841 and 2222, our carbon pricing policy statement or the PJM MOPR orders – I feel strongly about market-based mechanisms, and believe that our markets should ensure reliability at least cost by leveraging competition and creating an even playing field for all resource types and market participants. But it’s clear that we’re at an inflection point for thinking about whether our capacity markets are currently designed to support the generation mix that many of the Eastern RTOs’ states want. Indeed, certain states want cleaner energy resources and are willing to pay for it. And so, although I voted for our MOPR orders and believe those determinations were supported by the record, I’m not wedded to the policy calls of the past and I’m open to better accommodating state policies, so long as we’re still able to meet our statutory mandate.
Number two: While I’m looking ahead and want to help steer our markets toward better reflecting the current landscape, I also want to emphasize that we shouldn’t over-correct here. We can’t lose sight of how successful our organized markets have been, not only in producing substantial cost savings to consumers but also by pushing us toward our energy future. Over the years our organized capacity markets have been a core part of driving investments in more efficient, cleaner technologies. Competition has been and, in my view, should remain a key driver toward de-carbonization goals. There is so much power in well-designed competitive markets – so much power to deliver a cleaner grid at reasonable cost, and so much power to drive innovation – that we should not throw the baby out with the bathwater, so to speak. We should not go backwards; we should forge ahead by building on the market successes we’ve seen in a way that better accommodates state polices.
I was heartened to see some common drumbeats across the prepared statements of Mr. Asthana, Mr. Dewey, and Mr. van Welie – the leaders and thinkers at the helm of the RTOs we’re focused on today. One of those drumbeats was a shared view that, although our organized capacity markets must evolve, they also have played and should continue to play a vital role in ensuring resource adequacy. Competitive organized capacity markets, in combination with well-designed energy and ancillary services markets, are key to efficiently achieving reliability and resource adequacy on a forward basis.
And that gets me to point number three: The task we face here is complex, so we need to approach it with deliberate care. It’s not just about adjusting MOPR regimes. It’s about tackling a set of interrelated market issues – everything from making sure that the products and services offered in our energy and ancillary services markets are calibrated to ensure reliability now and in the future, to continuing to bring online and integrate emerging technologies and appropriately crediting resources. Looking at an ambitious, interrelated set of potential reforms like this requires thought and collaboration and a lot of listening to all voices. I’ve learned some of these lessons the hard way over the course of my career. So speaking from that place, I’d urge everyone to roll up their sleeves for an extended effort and avoid a rush to judgment on an artificially compressed timeframe. We can make targeted improvements in the near term, that’s absolutely true, but the real win for consumers will come when we’ve taken the time to map out a thoughtful set of reforms that’s built to last.
We’re all here because most, if not all, of us have a shared goal. The Eastern RTOs put it succinctly in their joint submission, so I’ll borrow from them: we’re here to harmonize the wholesale electricity markets with environmental policy goals and consumer preferences, ensuring a reliable, competitive, and efficient power system for the future. That’s an elegantly stated goal that will take time and all of our best thinking and effort. So let’s press forward deliberately together.
I’ll close by thanking you, Mr. Chairman, for convening this conversation, which I believe all five of us on the Commission have been eager to have. And I’ll again thank the panelists and staff for all the work you’ve done so far, and all the valuable thinking and collaboration you’ll continue to bring to these issues.