ConservAmerica recently joined 32 other organizations in sending a letter to U.S Department of Energy (DOE) Secretary Jennifer Granholm urging the administration to support the development and expansion of organized wholesale electricity markets as a market-based approach to supporting the clean energy transition and lowering prices for consumers.
Many regions of the country participate in an organized wholesale electricity market. States in the Southeast, Northwest, and Southwest still operate under the traditional vertically integrated utility model, though. Advocates for greater competition in electricity markets have supported local efforts to create organized wholesale markets in those areas.
Regions across the country are embracing the concept of organized wholesale electricity markets for their ability to boost grid reliability, encourage energy savings, reduce energy costs for consumers big and small, and accelerate decarbonization and the integration of renewable energy into the power grid.
Organized wholesale electricity markets provide a competitive platform for wholesale electricity trading between producers of energy and suppliers, along with ancillary services that help maintain a resilient and reliable power system.
Organized wholesale electricity markets provide electricity to over 200 million consumers across the country. Most include an independent entity – either a Regional Transmission Organization (RTO) or an Independent System Operator (ISO) – overseen by the Federal Energy Regulatory Commission that is responsible for coordinating power balancing across multiple utility service territories while ensuring reliability and dispatching least-cost generation first and managing transmission assets. Organized wholesale market operators are also required to have transparent processes to ensure a level playing field for participants.
While organized wholesale markets exist across much of the country, states in the Southeast, Southwest, and Northwest still operate under the traditional vertically integrated utility model, where a single utility has a monopoly on generation, transmission, and distribution services. An Advanced Energy Economy report released earlier this year estimated that a unified wholesale market and RTO covering 11 Western states could add up to 4,400 megawatts of new clean energy and save states $2 billion in annual energy costs.
In the letter, ConservAmerica and the other signers encourage DOE to ensure that state energy and regulatory officials and consumers have the necessary tools, including assistance understanding issues like market governance, planning and policy, and regulatory development; technical capacity to address challenges relating to the coordination and alignment of existing organized wholesale markets with state energy and climate priorities and interoperability; and assistance studying the costs and benefits to consumers and the financial and operations impacts of joining an organized wholesale electricity market, including regional and multistate-level economic modeling of the benefits of interstate sharing of electric resources to provide reliable and affordable service from the DOE to support their efforts for studying, planning, or executing these critical decisions to better integrate their electricity systems.
With the passage by Congress of several pieces of legislation, including the Infrastructure Investment and Jobs Act of 2021 and this year’s Inflation Reduction Act, unprecedented amounts of federal investment are available through DOE to support states seeking to establish or expand wholesale energy markets. As the DOE implements both the IIJA and the IRA, states across the country are in a unique position to maximize these investments by working with their utilities and other stakeholders to develop and improve organized wholesale electricity markets, specifically markets that enable cost-effective, clean energy deployment while maintaining reliability for the benefit of consumers. ConservAmerica and the other signing organizations urge DOE to seize every opportunity to support states in this effort.
To read the full letter, click here.