THE NATIONAL ASSOCIATION OF
STATE UTILITY CONSUMER ADVOCATES
RESOLUTION 2011 – 06
PRINCIPLES OF THE
NATIONAL ASSOCIATION OF
STATE UTILITY CONSUMER ADVOCATES
REGARDING THE AUTHORITY OF STATES TO SUPPORT OR ORDER THE ADDITION OF ELECTRIC CAPACITY RESOURCES
FOR RELIABILITY, ENVIRONMENTAL GOALS, OR OTHER
LEGITIMATE STATE PUBLIC POLICY OBJECTIVES
Whereas, the Federal Power Act generally reserves to the states or local governments the jurisdiction over decisions about where and whether to permit the construction of power generation plants and the fuels to be used; and
Whereas, the states and local governments also possess rights to promote the development of demand-side resources, including demand response and energy efficiency resources, and to decide where such resources should be located; and
Whereas, states, local governments and vertically-integrated utilities have legitimate interests in promoting the development of supply-side and demand-side power resources to promote electric reliability, environmental goals, energy security, and other legitimate reasons; and
Whereas, many state and local governments review the issues just stated in transparent, open regulatory proceedings where all interested parties and the public have the right to participate and with the proceedings taking place in the state that will primarily be affected, thus leading to decisions that are likely to be in the public interest; and
Whereas, those state and local governments typically make resource decisions not just on the basis of relatively short-term three-to-five year planning horizons but rather on the basis of the long-term economics of the expected life of the resource, as well as reliability, environmental goals, and other legitimate state public policy objectives, all of which are openly vetted in such proceedings; and
Whereas, the Federal Energy Regulatory Commission (“FERC”), has made recent rulings that significantly adjust the capacity market rules in large regions of the United States, being an April 12, 2011 Order in PJM Interconnection LLC, et al., 135 FERC ¶ 61,022 (“April 12 Order”) and an April 13, 2011 Order in ISO New England, Inc., et al., 135 FERC ¶61,029 (“April 13 Order”); and
Whereas, in the April 12 Order and the April 13 Order, FERC accepted proposals from regional transmission organizations that increase the risks to states, local governments, and vertically-integrated utilities and their customers, of building or promoting legitimate and necessary generation capacity or demand-side resources, including (i) the risk that such capacity or resources will not “clear” in their respective capacity markets; and (ii) the related risk that capacity will not be developed when and where it is needed to meet legitimate state purposes; and (iii) the related risk that states and their electricity consumers may have to pay significantly more for capacity than is actually needed for reliability; and
Whereas, FERC’s April 12 Order and April 13 Order raise serious questions as to whether and to what extent states, local governmental entities, or vertically-integrated utilities will be permitted to support the development of supply-side or demand-side electricity resources without the imposition of mitigation of bids or other unjust and unreasonable market rule provisions;
NOW, THEREFORE, NASUCA RESOLVES:
That NASUCA supports the continuing authority of states and local governments, under state law and the Federal Power Act, to regulate decisions about where to permit new power plant capacity resources or demand-side resources to be built, whether to build such capacity or resources, what fuels will be used at power generation sites, and other traditional state powers in this field, without undue interference from FERC, regional transmission organizations, or other governmental or non-governmental parties; and
BE IT FURTHER RESOLVED:
That NASUCA opposes capacity market mitigation rules that do not exempt supply-side or demand-side resources promoted by states, local governments, or vertically-integrated utilities in pursuit of legitimate state or local interests (“Legitimate State Capacity”), including but not limited to reliability or environmental goals; and
BE IT FURTHER RESOLVED:
That NASUCA objects to capacity market rules that will cause Legitimate State Capacity to fail to clear the market or to count as capacity, as such rules would (i) prevent states and local governments from exercising their statutory authority and legitimate interests and unduly harm retail customers; (ii) prevent the addition of capacity when and where it is needed to meet legitimate state concerns; and (iii) cause retail customers to pay higher prices for capacity than is needed for reliability or resource adequacy; and
BE IT FURTHER RESOLVED:
That NASUCA maintains that market rules that may cause Legitimate State Capacity not to count as capacity in the market are unjust, unreasonable, and a violation of sound economic principles; and
BE IT FURTHER RESOLVED:
That NASUCA will encourage FERC and, if necessary, Congress to protect the traditional authority of states, local governments, and vertically-integrated utilities in the field of electricity resources and to protect their legitimate interests, including but not limited to long-term economic interests, reliability, environmental goals, and/or other legitimate public policy objectives; and
BE IT FURTHER RESOLVED:
That NASUCA supports active advocacy and meaningful participation by ratepayer advocates in any state or federal proceeding involving the subject of this Resolution; and
BE IT FURTHER RESOLVED:
That NASUCA authorizes its Executive Committee to develop specific positions and to take appropriate actions consistent with the terms of this resolution. The Executive Committee shall advise the membership of any proposed action prior to taking such action, if possible. In any event, the Executive Committee shall notify the membership of any action taken pursuant to this resolution.
Approved by NASUCA: Submitted by:
Place: St. Louis, MO NASUCA ELECTRIC COMMITTEE
Date: November 15, 2011