Competition Is More Important Than Ever to Tackle Today's Energy Challenges

As we commemorate another Earth Day this April, the challenges facing our energy systems and the environment seem more pressing than ever. Americans face continued economic uncertainty following the COVID-19 pandemic and rising inflation. Recent power grid disruptions have us questioning the reliability of our electric service. Global conflict shines a light on the critical need for a steady supply of power generation resources. And we never lose sight of the need to constantly innovate, and find cost-effective and sustainable approaches to reduce the emissions that contribute to climate change across our economy. We’re at a pivotal point—where the decisions made today by policymakers, grid operators, regulators, and industry will determine whether competitive power markets can continue to deliver on the progress they’ve made over nearly three decades.

This year, the Electric Power Supply Association (EPSA) is celebrating our 25th anniversary of advocating for a fully competitive electric industry, and encouraging and expanding the development of competitive power markets. Since our founding, electric competition has delivered progress that even the initial champions of opening power markets may not have envisioned—clearing a path for cost savings, efficiencies, greater reliability, significant decarbonization, and swift adoption of new, cleaner power generation technologies. Competition and restructured markets also freed captive ratepayers from the burden of paying for new power plant investments, construction, operations, and closures—putting the risk of investment on private companies and shareholders.

We’re optimistic that the policies we’ve consistently advocated for and the solutions our member companies have provided can provide a sustainable, durable, and cost-effective path to electricity that is both cleaner and reliable. Today, we’ve seen regions with access to competitive markets enjoy lower carbon emissions; accelerated entry of new, cleaner, and more cost-effective technology; and greater reliability provided by the ability to pool power resources and the economic incentive for power generators to perform when needed. And EPSA member companies have brought new, cleaner, and competitively priced technology to the grid while maintaining resources needed to help ensure reliability—including more efficient, cutting-edge natural gas generation and the biggest battery storage facilities in the world.

Americans—and our nation’s leaders—understand the power of competition. In a poll conducted for EPSA by Morning Consult, 64% of U.S. adults said they support competitive power markets, with three-fifths saying they oppose monopoly utility control of the electric supply chain. And President Biden reiterated in his State of the Union speech that competition is essential for lowering costs for homes and businesses.

But achieving that vision requires policymakers, grid operators, advocates, and industry stakeholders to accept critical truths. America’s energy transition must not put reliability in jeopardy, and Americans must not be made to shoulder unnecessary costs in pursuit of a decarbonized grid. As in every aspect of life and policymaking, balance is key.

Importantly, natural gas will continue to be an indispensable source of reliable, flexible, and firm power generation for the next several decades. This fact has been highlighted in multiple studies, including a 2020 analysis by Energy and Environmental Economics Inc. (E3), which shows that 50 GW to 90 GW of firm, flexible natural gas generation will be needed to maintain system reliability in the PJM Interconnection footprint through 2045—even under deep decarbonization scenarios. America’s competitive power suppliers simply cannot do their most important job—providing reliable electricity—without access to this critical resource.

Recent Pew Research Center polling revealed that Americans on a bipartisan basis understand the need to keep all resources on the table even as they hope for a cleaner future—with two-thirds of survey respondents saying the U.S. should use a mix of fossil fuels and renewables. Seventy percent worry that a transition to renewable energy could cause unexpected problems for the country, including higher costs, economic strain, and reliability concerns.

Energy is too central, not just to our way of life, but also to public health and safety, to put in jeopardy. That’s why EPSA will continue to advocate at every level—from the White House to the Federal Energy Regulatory Commission to regional transmission operator stakeholder processes and state utility commissions—for policies that allow our members to do their job. Energy industry observers are well aware of the pitfalls that emerge when competition is compromised—from state political scandals that put ratepayers on the hook for billions in subsidy payments to exorbitant cost over-runs and construction delays that ultimately harm customers. Yet, over the past couple of years, we’ve seen troubling momentum for approaches that undermine the integrity of competitive markets, favor out-of-market subsidies funded by ratepayers, and threaten the ability of competitive power generators to invest in and maintain resources needed for reliability.

Our energy future is not all or nothing. It doesn’t require banning resources, bankrupting Americans, or giving up on lowering carbon emissions. Competitive markets—and competitive policies like carbon pricing—are a proven path toward what I like to call the triple win: reliable, affordable, and cleaner power. In the key policy and market design questions on the table today—and those to come—we urge decision-makers to choose the competitive, reliable, and cost-effective path forward.

—Todd Snitchler is president and CEO of the Electric Power Supply Association.