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Utilities ask Congress to ‘come to grips’ with clean energy requirements by setting nationwide rules

Thursday, June 13, 2019

Re-posted from a Washington Examiner article by Josh Siegel

PHILADELPHIA — Some of the nation’s largest electric utilities are calling on Congress to provide uniform rules for clean energy to help them meet self-established goals for reducing carbon emissions.

Utilities convening in Philadelphia this week for the industry’s annual convention hosted by the Edison Electric Institute asked the federal government to pass either a carbon tax or a clean electricity mandate to provide certainty to electricity providers seeking to satisfy public demand for cleaner energy.

“The most efficient thing long-term is for this country at the federal level to come to grips with the situation and allow for markets to be designed that will advance what our customers want,” Chris Crane, the CEO of Exelon, a Chicago-based utility, told the Washington Examiner in an interview.

Crane and other utility leaders have welcomed state initiatives to increase the use of renewables and other zero-carbon sources, such as nuclear power, but they warn that a patchwork of differing policies would complicate utilities’ clean energy plans.

More than half of U.S. states have adopted clean electricity standards or more restrictive renewable portfolio standards, requiring utilities to obtain an increasing amount of electricity from wind and solar and other zero-carbon energy sources.

“We support the state requirements,” Crane said. “But it would be cleaner, easier, and more economical if we were able to have a federal standard.”

Exelon would benefit from a carbon price or mandate, given it operates no coal and generates the vast majority of its electricity from nuclear power, followed by natural gas. It has lobbied for state policies in states such as Illinois, New York, and New Jersey that have acted to compensate nuclear plants.

Exelon, along with Virginia-based utility Dominion Energy, recently joined the CEO Climate Dialogue, a new coalition of businesses and environmental groups formed to asked Congress for legislation that would put a price on carbon across the U.S. economy to achieve at least an 80% reduction in emissions by 2050. Exelon also belongs to the Climate Leadership Council, a GOP-led group promoting a carbon tax that would return the revenue to customers, while Dominion has set a goal of reducing carbon emissions from its electricity 60% by 2030 and 80% by 2050.

“Our preference is for a straightforward policy coming from Congress that will be long-lasting that we can react to, plan for, deal with, and educate our customers on,” Dominion CEO Thomas Farrell told the Washington Examiner.

In recent months, the progressive Green New Deal has inspired a host of presidential candidates to propose climate change policies with the goal of reaching 100% clean energy and net-zero emissions by 2050.

But Crane and Farrell say such goals are unachievable given today’s technology.

“It would be easy for me sitting in 2019 to say we are going to be 100% by 2050,” Farrell said. “But we don’t do things that way at our company. I don’t see a path with today’s technologies to 100%.”

The utility leaders said advancements are needed in technologies such as long-duration energy storage — which would enable greater use of wind and solar — carbon capture for coal and gas plants, and advanced nuclear reactors to reach 100% clean energy.

Supporters of carbon pricing and electricity standards, however, say a federal policy would nudge companies towards clean energy technologies more quickly.

Rep. Paul Tonko, D-N.Y., the chairman of the House Energy and Commerce Committee’s subcommittee on climate change, pushed at the utility conference for an “economy-wide carbon price,” but he acknowledged it would take “a while to develop” given Republican opposition.

“They have made great progress in that they have reduced a lot of the carbon footprint, but we have to work together on a federal policy to ensure additional progress is achieved,” Tonko told the Washington Examiner, referring to the utility industry. “What we don’t need is this roller coaster ride. Companies are going to make investments, but not foolishly.”

Federal energy regulators and grid operators are also backing a federal carbon reduction policy.

Asim Haque, executive director of strategic policy and external affairs for PJM, the nation’s largest grid operator, noted during a panel event at the utility conference that various states covered in his power market have different clean energy mandates.

“I would love if there was uniformity and consensus with true clarity to say, here is where policymakers want us to be,” Haque said. “From a purely market perspective, you want to have some direction or uniformity.”

The problem with having multiple state climate policies is it risks the potential of so-called “carbon leakage,” when there is an increase in emissions in one state as a result of emissions reductions by a second neighboring state with a strict climate policy.

This makes it challenging for FERC to fulfill its mandate to ensure “just and reasonable rates” for electricity consumers, the commission’s chairman Neil Chatterjee said in testimony before Congress Wednesday.

Dominion has used this concern to justify the company’s reservations about Virginia’s proposal to join the Regional Greenhouse Gas Initiative, a cap-and-trade program covering the power sector in nine East Coast states.

“Our studies show that carbon emissions [regionally] under this proposal would rise because electricity could be cheaper to buy off system [from countries outside RGGI] with fossil fuel-based carbon,” Farrell said.

Environmental groups, however, cite current RGGI states that have cut emissions without raising power prices. Critics also charge that Dominion isn’t sufficiently committed to zero-carbon energy, given it recently added large natural gas plants to its fleet, and is a co-owner of the Atlantic Coast pipeline being developed to transport gas along the Northeast.

“We are going to have natural gas used to produce electricity for years and years to come,” Farrell acknowledged. “A huge amount of renewables will have to be built. So, you have to have something that will produce electricity when renewables aren’t working.”

Tonko, the Democratic congressman, said utilities need to do more to lobby for federal policy, especially given the industry’s role in helping electrify other sectors outside power like transportation and manufacturing.

“The aggressiveness of the lobbying needs to accompany the enormity of the crisis,” Tonko said.

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