Owners of uneconomic coal plants in the US have tried many ways to keep operating, even when it is not profitable to do so, such as out-of-market subsidies and re-regulation (as we discussed in Episode #41), bailouts and wholesale market controls (as we discussed in Episode #70), and seeking capacity payments or other novel payments for alleged reliability (as we discussed in our trilogy of shows on decarbonizing power markets, Episodes #90, #97, and #105).
But there’s another tactic, variously known as “self-committing” or “self-scheduling,” and it happens when a utility that owns a coal-fired power plant elects to operate the plant no matter what the going rate for power is, even if that price is below its operating costs. Fully regulated utilities oftentimes can pass the costs of operation onto their customers even when they’re electing to run at a loss, without having to go to the trouble of asking for additional cost recovery from a regulator, or getting a legislator or wholesale market operator to give them a handout in one form or another. And it all happens more or less invisibly to customers and regulators. Only a researcher with a sharp eye and expert knowledge of what to look for would even detect these uneconomic operations, such as our guest in this episode.
Joe Daniel is a Senior Energy Analyst with the Union of Concerned Scientists. Joe got his start in the energy industry as an engineering consultant for oil and gas companies. After a few years, he transitioned into utility work and began increasingly focused on the economics of coal-fired power plants. Today, he leads UCS’s analytical work in state utility regulatory proceedings where he often provides expert testimony to commissions on a range of issues from economic analysis to resource planning. In his role, he establishes policy positions, develops strategy, and produces analytics that spur innovation to facilitate a modern electricity grid that is affordable, clean, flexible, and reliable.
Recording date: December 5, 2019
Air date: January 22, 2020
Geek rating: 8