Advanced Energy Perspectives

Advanced Energy Buyers Group Brings Voice of the Customer to Solar Trade Case and Grid Pricing Proposal

Posted by Caitlin Marquis

Nov 8, 2017 11:00:00 AM

    

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Just over a month ago, AEE launched a new group of advanced energy users, called the Advanced Energy Buyers Group, led by member companies including Microsoft, Amazon, Walmart, and others. The concept is simple: Just as AEE is the business voice of advanced energy, the Advanced Energy Buyers Group serves as the policy voice of energy users. In practice, that means the Buyers Group will weigh in on a range of energy policy issues that matter to companies on the customer side of the meter, specifically on behalf of companies seeking ways to increase their use of advanced energy.

In the month since its launch, the Buyers Group has kept busy on two high profile issues, both with big implications for large consumers: the Section 201 Solar Trade Case now before the U.S. International Trade Commission and the “Grid Pricing Rule” proposed by the Department of Energy late last month and under consideration by the Federal Energy Regulatory Commission.

Let’s dig in.

Section 201 of the Trade Act of 1974 allows temporary import relief to U.S. industry in the form of tariffs, quotas, minimum prices, etc. It applies to specific products, domestic manufacturers of which are found to have suffered “serious injury” due to imports, even where there is no charge of unfair trade practices (claims of which are adjudicated under a different section of the Trade Act). The case in question was brought by Suniva, a Chinese-owned solar manufacturer with operations in Georgia and Michigan, and German-owned SolarWorld—both companies now in bankruptcy proceedings. In September, the U.S. International Trade Commission found that imports had harmed U.S. manufacturers of solar panels, leading the Commission to a new proceeding to determine appropriate remedies. The ITC will send a recommendation to President Trump in mid-November, and the Administration will have until January to decide how to proceed.

The case has attracted attention from companies up and down the entire solar supply chain, but the voice of customers was completely missing from the case—largely because traditional consumer representatives have not been engaged on the issue. However, any decision in the case resulting in higher prices for solar would have consequences for the members of the Buyers Group. The Buyers Group submitted a pre-hearing brief to the U.S. ITC on Sept. 27, clearly stating the implications of the case for them, as current and future solar customers:  “A recommendation in the Section 201 Trade Case before the I.T.C. to impose undue tariffs on imported solar panels would increase our operating costs and directly harm our businesses.”

The Buyers Group explained that their interest in renewable energy derives from corporate commitments, which they characterized as “… a promise we have made to our customers, our employees, our shareholders, our boards, and the public at large,” which could not be ignored. In addition, the Buyers Group wrote, “Meeting these targets will reduce our energy costs and support new jobs in the United States, and failure to meet these goals would hurt our competitive advantage in the global marketplace.”

In a post-hearing brief filed Oct. 10, the Buyers Group reiterated these concerns, and also clarified to the ITC that price increases will lead to a slump in demand for solar energy. This may seem obvious, but petitioners in the case argued that demand for solar is largely inelastic – in effect, that cost did not matter – due to state mandates. The Buyers Group pointed out that, for large voluntary customers, “cost is one of the major factors when deciding between different renewable energy options to meet our needs.” Citing a recent report by the National Renewable Energy Laboratory, the Buyers Group also pointed out that voluntary corporate procurement accounts for a growing share of the large-scale solar market, growing to 17% of total  procurement in early 2017, up from 9% in 2016 and less than 1% in 2014. 

The Commissioners of the ITC released their individual recommendations on October 31, with all three recommending quotas, tariffs, or both, but at levels that would have far less impact on the solar market than the remedies requested by Suniva and SolarWorld – a source of some relief to solar developers and installers. The ITC is due to submit a formal recommendation to President Trump on November 13.

The Buyers Group also weighed in on the Department of Energy’s controversial Notice of Proposed Rulemaking (NOPR) to provide full cost recovery to “fuel secure” generators in wholesale markets under the jurisdiction of the Federal Energy Regulatory Commission (FERC). AEE has joined with a broad range of energy industry groups to oppose this proposal, which is predicated on DOE claims of urgent threats to the reliability and resilience of the nation’s electric grid – claims that AEE, grid operators, and industry experts have debunked. (See AEE's backgrounder on the issue, Bailout Without Benefit.) FERC has authority to decide whether and how to proceed in response to DOE’s NOPR.

As consumers who pay the price for interruptions in electricity service and for investments to avoid such interruptions, the Advanced Energy Buyers Group took a hard look at whether the NOPR would deliver sufficient benefits to justify the cost – and concluded it would not. In comments submitted to FERC, the Buyers Group wrote, “a Grid Pricing Rule in line with DOE’s proposal would undermine the core functionality of wholesale markets, eroding competition and imposing burdensome out-of-market costs on consumers like our companies, without providing material improvements in reliability and resilience to the energy system.”

In coming to this conclusion, the Buyers Group drew upon “recent assessments of the reliability and resilience of the electric grid, current and planned efforts of grid operators to adjust to a changing resource mix, and the overwhelming evidence from recent major outage events,” finding that DOE’s declaration of an urgent threat is “at odds with factual analysis and evidence.” The companies strongly urged FERC not to finalize the proposal. In reply commentsfiled yesterday, the Buyers Group reiterated this recommendation, and also asked that any future action taken by the Commission in response to the NOPR allow “ample time and opportunity for meaningful analysis, input, and engagement.”

The Buyers Group is just getting started. Just this week, members of the Buyers Group met with officials at FERC and the Commerce Department in Washington, D.C. As engaged electricity consumers and sophisticated users of advanced energy, the Advanced Energy Buyers Group will continue to engage on policy in support of an energy future that relies on secure, clean, affordable energy. Watch this space and follow along as the Buyers Group continues to bring the corporate consumer perspective to federal and state issues.

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Topics: Federal Policy Update

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