Advanced Energy Perspectives

Last week, the Indiana Utility Regulatory Commission (IURC) issued its final order in a proceeding to examine Duke Energy Indiana’s coal-fired unit commitment decisions during the Fall of 2019. While the IURC ultimately declined to order Duke to refund customers for the financial losses it knowingly incurred, the Commission rightly acknowledged that today’s changing energy landscape has complicated the way coal plants should operate. AEE had hoped that the IURC would go further to protect customers from the financial harm caused by Duke’s uneconomic operating practices, but the Commission did push Duke to move toward a better decision-making process for future commitment decisions. With those now under a bit more scrutiny, we look forward to working with Duke on the alternatives we proposed to help the utility give up its costly coal addiction in its 2021 Integrated Resource Plan.

Over the past several months, our Indiana team has been intervening in a proceeding before the Indiana Utility Regulatory Commission (IURC) to examine Duke Energy Indiana’s coal self-commitment practices. Self-commitment refers to a process by which a utility instructs the regional market within which it operates – in this case, the Midcontinent Independent System Operator (MISO) – to dispatch the utility’s own resource unit regardless of whether or not it is the cheapest available at the time. Many vertically integrated utilities have been using this mechanism to run their expensive coal plants more frequently than economics would otherwise dictate. They do this because it is not their shareholders who suffer financial losses, but rather their captive ratepayers: When the cost to operate these units exceeds the market clearing price, utilities pass along the difference to customers, in part through fuel adjustment clause proceedings. AEE is working to curb this self-serving utility practice.

The decline of coal has been well documented over the last decade, as it has gone from the majority electricity resource in the United States to less than a third of current power generation. At the same time, there have been many policy attempts to stop the retirement of uneconomic coal. For the first two years of the Trump Administration, several attempts were made – including use of the now-famous Defense Production Act – to bail out coal plants across the country. And some state legislatures – most notably in Indiana – have tried to keep utilities from transitioning from coal to advanced energy solutions. Now, the practice of “self-scheduling” coal plants – i.e., running them even when they are not the cheapest resource available for customers – is emerging as a coal-protection mechanism, especially in the MISO and SPP markets. In the first half of 2020, several state commissions, including the Indiana Utility Regulatory Commission, have begun to more closely review whether utilities under their jurisdiction engage in this practice. In July, Advanced Energy Economy intervened in an Indiana proceeding to argue against Duke Energy Indiana’s self-scheduling practice and teamed up with Berkeley Research Group to show how advanced energy resources can replace these coal plants and save Indiana ratepayers hundreds of millions of dollars.  

In December, we published a list of the top 10 utility regulation trends of 2019. With 2020 now past the halfway point, we check in on the top public utility commission (PUC) actions and trends so far this year. Ten trends stand above the rest, from the impact of COVID on everything, to a growing trend in electric vehicle make-ready investments, to an increasing number of states implementing 100% clean energy targets. And, for the first time, we are including in our curation a key trend in federal regulation of wholesale electricity markets, as it goes directly to the question of who is in charge of energy policy in a changing electricity landscape. Prepare to settle in, as here is the full round-up of the top 10 utility regulation trends so far in 2020.

Note: some links in this post reference PUC filings and other documents in AEE's software platform, PowerSuite. Click here to sign up for a free trial.

The numbers are staggering: 33 million Americans have lost their jobs since the start of the COVID pandemic, including nearly 600,000 in the advanced energy industry. And by the end of June, that number could hit 850,000. That would be nearly a quarter of the 3.6 million advanced energy jobs that existed at the start of the year – a time when advanced energy was a $238 billion a year industry in the United States, with employment that was growing nearly twice as fast as U.S. employment overall. For those of us who work in the industry, we know the new reality all too well, as emails bounce back not with “out of office,” but rather “no longer works here” or “has been furloughed.” It’s heartbreaking. But there are things state policymakers – especially governors and public utility commissioners – can do to prevent advanced energy business from coming to a complete halt during the public health crisis, and keep the advanced energy industry in a position to aid the economic recovery that follows. Here we lay out five ways state policymakers could do just that.