Advanced Energy Perspectives

Buyers Group Has Busy First Year Promoting Access, Protecting Markets

Posted by Caitlin Marquis

Sep 27, 2018 3:11:37 PM

    

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Last September, the Advanced Energy Buyers Group launched with the mission to advocate for policies that would make it easier for large customers to pursue advanced energy, and to accelerate the transition to an energy system that is more secure, clean, and affordable for all customers. One year in, we have secured a few key wins—and the work is just beginning.

The Advanced Energy Buyers Group was founded to advocate for policies that would support and accelerate the growing trend among leading companies to choose advanced energy for their operations that is not only affordable and reliable, but also clean. Advanced energy purchasers needed a collective, consistent, and strategic voice on key issues impacting their ability to obtain the kind of energy they want to power their operations, and the Buyers Group was born.

Members of the Buyers Group span a range of sectors and industries, but they share a goal of increasing their own use of advanced energy, and a recognition that policy is key to meeting their energy goals affordably and efficiently. The Buyers Group engages on legislative and regulatory priorities at the state, regional, and federal level, and in its first year the Buyers Group has focused on two key themes: (1) expanding customer access to advanced energy, and (2) defending and supporting competitive prices and competitive markets. We’ll take each in turn.

Expanding Customer Access to Advanced Energy

The importance of expanding customer access to advanced energy is clear: without legal pathways to purchase renewable energy onsite and off, and to pursue energy storage and other resources, companies cannot make progress toward their renewable energy and sustainability goals. Getting those legal pathways in place, unfortunately, is no simple task. In many states, customers lack choice and control when it comes to their electricity purchases. Policy changes—whether introduction of utility offerings, or expansion of retail choice—are key to overcoming these barriers, and in 2018 the Buyers Group made progress in California and Virginia, with ongoing work in Michigan.

In California, a state with its own ambitious clean energy goals, large customers are eager to move faster and support affordable and innovative advanced energy deployment—but only a small fraction of the market is open for retail choice. The state’s Direct Access program, which allows customers to purchase electricity from a competitive provider (called an Electric Service Provider, or ESP), has been fully subscribed for years, with a long waiting list.

This year, the Buyers Group successfully supported SB 237, a bill passed by the state legislature and signed by Gov. Brown to expand California’s Direct Access market. The new law raises the annual cap of the state’s Direct Access market by an additional 4,000 GWh by next June, and requires the California Public Utilities Commission (CPUC) to recommend a second reopening schedule for the Direct Access market. There is much work left to be done to give all companies in California access to the advanced energy of their choice, but SB 237 is a key step forward.

Exercising customer choice in the energy they use is even more complicated in Virginia, thanks to a provision in Virginia State Code allowing customers to leave the service of an investor-owned utility (IOU) only under certain conditions. First, to have full “shopping” rights, customers must have a load of at least 5 MW (which can be aggregated across multiple facilities only if approved by state regulators). Second, customers are subject to a requirement to provide the IOU with five years’ advance notice to return to regular service, tying business customers’ hands far more than other states. Finally, customers of any size are allowed to leave the IOU for a 100% renewable energy alternative only if the IOU does not offer a 100% renewable energy option.

Members of the Buyers Group weighed in to support legislation that would have addressed all three limitations; while the legislation did not pass in 2018, an important conversation has been sparked. In addition, AEE was an intervening party that helped to secure the rejection of a 100% renewable energy tariff introduced by Dominion, which would have closed off customers’ options to seek renewable energy from competitive providers, leaving them only with a utility offering that what was certain to be costly and cumbersome.

Finally, in Michigan, AEE and the Buyers Group are working with our state partner, the Michigan Energy Innovation Business Council, to advocate for improvements to the voluntary customer renewable energy offerings from both Detroit Edison (DTE) and Consumers Energy (Consumers). This effort stems from successful passage of a law in 2016, which AEE helped to push forward, that requires Michigan utilities to develop voluntary renewable energy programs.

Other state engagements from the past year can be found at the Advanced Energy Buyers Group website.

Defending and Supporting Competitive Markets and Prices

Without well-functioning markets, a customer can have all the choice in the world and still not make progress toward ambitious clean energy goals. Recognizing the importance of underlying market dynamics, the Buyers Group has also been active on a number of key policy issues at the federal and regional level in support of a fair, affordable, reliable, and resilient electricity system.

One of the first issues the Group engaged on was the “solar trade case,” a petition before the U.S. International Trade Commission (ITC) and then the U.S. Trade Representative (USTR) regarding potential tariffs on crystalline silicon photovoltaic cells and modules. The Buyers Group weighed in with both the ITC and USTR, recommending a balanced approach that would avoid unduly increasing the cost of solar energy for downstream customers, emphasizing that voluntary purchasers of solar energy are price sensitive and that imposing cost increases would upset the solar market for such buyers. While the Buyers Group expressed disappointment that tariffs were imposed, these tariffs came in at a much lower level than requested by the petitioners in the case, avoiding worse impacts on the solar industry and its corporate customers.

The Buyers Group has also stepped in to defend against market interventions that would raise electricity prices for all consumers and unfairly disadvantage advanced energy technologies sought by corporate buyers. Specifically, in response to a proposal from the U.S. Department of Energy (DOE) that would have imposed out-of-market support for existing, often uncompetitive coal and nuclear units in the name of fending off a grid resilience “emergency,” the Buyers Group met with the Federal Energy Regulatory Commission (FERC) and wrote multiple sets of comments urging the Commission to ensure that any steps taken to enhance system reliance be based on clear metrics and rely on market-based and technology-neutral solutions that reward innovation and foster voluntary customer actions. The Buyers Group also submitted comments to DOE and joined other consumer groups in a Washington Examiner op-ed urging against granting FirstEnergy Solutions’ request for emergency relief for its aging fleet of power plants, and again in response to a leaked DOE memo indicating that the Agency was considering providing out-of-market support for existing coal and nuclear fleets.

The Buyers Group has also weighed in on other issues before FERC that are also important for enabling innovation and maintaining market certainty and competitiveness. Among the topics tackled are ongoing proposals to make sweeping changes to PJM Interconnection’s capacity market, and FERC’s consideration of an order to open opportunities for aggregated distributed energy resources to participate in wholesale markets. These and other proposed market changes will shape future opportunities for customer-driven advanced energy deployment for better or for worse—and the Buyers Group has no interest in being held back by a regulatory structure slow to adapt to rapidly advancing technology improvements.

These are just the highlights, but they give a good sense of what the Buyers Group has been focused on in its first year. We are making plans for an even bigger year in 2019, focused on the same themes of customer choice and control and fair, competitive markets—but taking on new challenges. Stay tuned!

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