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Richard Brooks's picture
Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

Inventor of patent 11,374,961: METHODS FOR VERIFICATION OF SOFTWARE OBJECT AUTHENTICITY AND INTEGRITY and the Software Assurance Guardian™ (SAG ™) Point Man™ (SAG-PM™) software and SAGScore™...

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  • Nov 12, 2020

The energy transition has opened our eyes to the difficulties that arise when the forces of "creative destruction" are applied to an established industry. I don't envy the position that former FERC Chairman Neil Chatterjee was engaged. Powerful forces were calling on FERC to address Carbon Pricing within whoelsale electricity markets, while States were simultaneously advancing an agenda to address GHG emissions. The conversation on carbon pricing had to take place and the FERC Technical Conference was the proper forum to hold this discussion. However, it's truly a missed opportunity to have an open and honest discussion about carbon pricing with all stakeholders, by not including the States. I agree with Commissioner Chatterjee - it was a mistake (missed opportunity) to start a useful conversation on a consensus solution to achive reliable electric service for all as we transition to an energy grid with less GHG emissions, until we finally reach a day when carbon emissions will be under control, limiting damages to the planet, and electricity prices are just and reasonable for all parties (supply and demand).

To FERC's credit, the Technical conference did put a stake in the ground; FERC's policy statement makes it clear that FERC does not control carbon emissions, States are the decision makers when it comes to carbon pricing (ref: 12). End of story. Wholesale electricity markets may contain prices that reflect a State determined carbon pricing component, but only if a State imposes such a requirement. Even then, each "FPA 205 tariff filing" will be reviewed independently by FERC under it's FPA authority, based on the the FERC policy statement (ref: 16)

The search for a consensus solution that satisfies State based energy objectives resulting in just and reasonable electricity prices in whoelsale markets, which FERC regulates still has a few options to consider to meet State objectives, resouce adequacy and a reliable electric supply:

  • Scarcity Pricing
  • Forward Clean Energy Markets
  • Clean Energy Standards, with appropriate technical solutions that achieve an objective function that satisfies State energy goals, while ensuring a reliable electric grid that properly compensates the parties that deliver our energy at a price point that is just and reasonable to all
  • Add your option to the list - I'm sure there are more - there are always more options when the topic is "energy industry standards"

The creative destruction train has left the energy station. Green Energy Buyers are nudging the industry toward a new normal as wholesale capacity and energy markets tumble toward the inevitable cliff that lies in the path ahead.

Best of luck former FERC Chairman Chatterjee, you played the hand you were dealt in a game where nobody wins. IMO, you did the best job you possibly could have, given the circumstances. 

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Thank Richard for the Post!
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