Thanks for taking the time to read this article, Matt. I respectfully disagree with your interpretation. This pair of 2016 FERC decisions 155 FERC ¶ 61,101 and 155 FERC ¶ 61,102 ruled against Ohio nuclear power plant subsidies on the grounds of federal preemption. CAISO is unique because it is NOT currently a multistate ISO. Its board of governors are selected by the governor of the state of California. That governance would disappear if CAISO became a multistate ISO.
Thanks Gene. You may not know this, but I worked at FERC for 5 years starting in 2018 and was the Senior Legal Advisor to FERC’s Chairman for some of that time. I am well aware of this issue as we spent lots of time dealing with subsidies of certain types of generation. The two cases you cited don’t address the question of the legality of subsidies, but rather dealt with favoritism in contracts between affiliated companies. Look at this Seventh Circuit decision from 2018 that directly addressed a complaint about the legality of subsidies granted to nuclear generators. EPSA v. Star, 904 F.3d 518 (you can find it if you copy my cite into Google Scholar). If you read it, you will see that not only did the Court uphold the subsidies, but FERC and the United States filed a joint brief taking the position that the subsidies are lawful.
BTW, the fact that CAISO is a single state RTO does not have any effect on FERC’s jurisdiction. Both FERC and the New York ISO, another single state RTO, have been subject to FERC jurisdiction to the same extent as the other RTOs from the day they were formed. I can send you some cases on this if you would like. Just let me know.
Matt: That is good news that FERC upheld the nuclear power subsidies. Please send the cases you mentioned. I hope I don't need a Westlaw subscription to see them.
To be clear, I agree with you 100% on keeping Diablo Canyon in service and more generally on the benefits of nuclear power. But I don’t see regionalization of CAISO as a threat, both because subsidies to nuclear generators have been found to be lawful and because, in any event FERC already has the jurisdiction over CAISO so regionalization changes nothing.
I appreciate this reference. It shows on two pages how important Diablo Canyon is for California grid reliability. See page 17 and the important table on page 123.
I see a table including Utah on page 127, but I did not observe the term "Wasatch" in the NERC assessment. (The Wasatch mountain range is in Utah.) Please point me to the reference to Wasatch to California Transmission. Berkshire Hathaway's Energy Gateway is not mentioned. Neither is Anschutz's TransWest Express shown. Thanks!
Yes. There are 75 instances of Wasatch The Berkshire Hathaway Energy Gateway is not mentioned even though the energy gateway serves the same function of moving electric power from Wyoming and Utah to California.
Thanks Gene for publishing this. I have described myself as a "Practical Nuts and Bolts Engineer" not a policy wonk. Therefore, the policies you have written about are sort of out in the weeds for me. From a simple "Grid Fix" (and nothing is simple with government....) I would love to see us return to Regional Regulated Utilities that are (as they once were) accountable for planning, building, operating and maintaining the electricity generation assets in their own service territory. In my view, where the U.S. went off the rails on reliable electricity supply was with de-regulation and separation of generation from T&D. Worsened by huge tax incentives for solar and wind that is forced onto the Grid and thus, reduces capacity factor of the plants that are depended on to keep 60 Hz reliable power. One interesting case study is "Energy Islands" where going full wind and solar has been tried. Such as Hawaii and the Canary Islands. I wrote about Hawaii's experiences of shutting down the Barber's Point coal plant. Once that was done, electric prices climbed even higher. Not a surprise. If California was not connected to the Grid and was an energy island, I suspect a similar cost issue. Update on Hawaii’s “Green New Deal” March 2024: http://dickstormprobizblog.org/2024/03/20/hawaii-a-glimpse-into-the-future-of-the-green-new-deal-aka-inflation-reduction-act-here-is-an-update/
Thank you for your on-point commentary. As I continue to learn how decisions are made regarding our power grid, I become more and more cynical. I now imagine a bunch of economic elites sitting around a big conference table, perhaps smoking cigars and sipping port. They are developing policies to increase the cost of a necessary of modern life, electric power while they are laughing and patting each other on the back. The really sad thing is the relevant federal and state regulators are in the same room, agreeing with the elites.
Follow the money! Buffett's PacifiCorp has sold almost a billion dollars of electric power into California since November, 2014. https://www.westerneim.com/Pages/About/QuarterlyBenefits.aspx His scheme uses a daily spot market he helped set up. The daily spot market exploits a loophole in California SB 1368, (Perata, 2006) which sets an emission limit for imported power. However, SB 1368 only applies to long-term power supply contracts - greater than 5 years!
Since I live on the East Coast, I don't feel entitled to express an opinion on the composition of the CAISO Board of Directors. But let me allay your concerns that if this were to happen it could lead to the elimination of California's subsidies for Diablo Canyon.
For one thing, CAISO is, and always has been, subject to federal jurisdiction. All wholesale sales of electricity in California have been deemed to be in interstate commerce since the 1950s or 60s. Anyone who thought they were harmed by the subsidies could attempt today to have them terminated.
But there is little danger of that. Hughes v Talen applies only to a narrow type of subsidy in which the subsidized generation is required to offer into the markets at a set price. There are all kinds of subsidies for different types of generation that do not run afoul of that case. Most relevant here, Illinois and New Jersey implemented Zero Emission Credits (ZECs) to subsidize nuclear power plants, and both of these programs were upheld in court.
Matt, please see my comment above rebutting your claims. I would be very happy to see counterexamples regarding my concerns about California nuclear power. Please send me the citations to relevant case law upholding the Illinois and New York Zero Emissions Credits.. Ideally also for New Jersey's ZEC program.
Thanks for taking the time to read this article, Matt. I respectfully disagree with your interpretation. This pair of 2016 FERC decisions 155 FERC ¶ 61,101 and 155 FERC ¶ 61,102 ruled against Ohio nuclear power plant subsidies on the grounds of federal preemption. CAISO is unique because it is NOT currently a multistate ISO. Its board of governors are selected by the governor of the state of California. That governance would disappear if CAISO became a multistate ISO.
Thanks Gene. You may not know this, but I worked at FERC for 5 years starting in 2018 and was the Senior Legal Advisor to FERC’s Chairman for some of that time. I am well aware of this issue as we spent lots of time dealing with subsidies of certain types of generation. The two cases you cited don’t address the question of the legality of subsidies, but rather dealt with favoritism in contracts between affiliated companies. Look at this Seventh Circuit decision from 2018 that directly addressed a complaint about the legality of subsidies granted to nuclear generators. EPSA v. Star, 904 F.3d 518 (you can find it if you copy my cite into Google Scholar). If you read it, you will see that not only did the Court uphold the subsidies, but FERC and the United States filed a joint brief taking the position that the subsidies are lawful.
BTW, the fact that CAISO is a single state RTO does not have any effect on FERC’s jurisdiction. Both FERC and the New York ISO, another single state RTO, have been subject to FERC jurisdiction to the same extent as the other RTOs from the day they were formed. I can send you some cases on this if you would like. Just let me know.
Matt: That is good news that FERC upheld the nuclear power subsidies. Please send the cases you mentioned. I hope I don't need a Westlaw subscription to see them.
I’ll send them later today. No Westlaw needed.
To be clear, I agree with you 100% on keeping Diablo Canyon in service and more generally on the benefits of nuclear power. But I don’t see regionalization of CAISO as a threat, both because subsidies to nuclear generators have been found to be lawful and because, in any event FERC already has the jurisdiction over CAISO so regionalization changes nothing.
I would be gratified to learn that Warren Buffett can't successfully challenge California SB 846 in federal court.
You can never say never but it seems extremely unlikely
Gene are you aware the NERC 2024 long term reliability assessment talks about Wasatch to California Transmission?.
https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_Long%20Term%20Reliability%20Assessment_2024.pdf
I appreciate this reference. It shows on two pages how important Diablo Canyon is for California grid reliability. See page 17 and the important table on page 123.
I see a table including Utah on page 127, but I did not observe the term "Wasatch" in the NERC assessment. (The Wasatch mountain range is in Utah.) Please point me to the reference to Wasatch to California Transmission. Berkshire Hathaway's Energy Gateway is not mentioned. Neither is Anschutz's TransWest Express shown. Thanks!
That’s because I had the wrong report in my head! But I am glad that one armed you with more data. This is the one I was thinking of https://www.nerc.com/pa/RAPA/Documents/ITCS_Final_Report.pdf . There are more links to study information on this page, https://www.nerc.com/pa/RAPA/Pages/ITCS.aspx
Yes. There are 75 instances of Wasatch The Berkshire Hathaway Energy Gateway is not mentioned even though the energy gateway serves the same function of moving electric power from Wyoming and Utah to California.
Thanks Gene for publishing this. I have described myself as a "Practical Nuts and Bolts Engineer" not a policy wonk. Therefore, the policies you have written about are sort of out in the weeds for me. From a simple "Grid Fix" (and nothing is simple with government....) I would love to see us return to Regional Regulated Utilities that are (as they once were) accountable for planning, building, operating and maintaining the electricity generation assets in their own service territory. In my view, where the U.S. went off the rails on reliable electricity supply was with de-regulation and separation of generation from T&D. Worsened by huge tax incentives for solar and wind that is forced onto the Grid and thus, reduces capacity factor of the plants that are depended on to keep 60 Hz reliable power. One interesting case study is "Energy Islands" where going full wind and solar has been tried. Such as Hawaii and the Canary Islands. I wrote about Hawaii's experiences of shutting down the Barber's Point coal plant. Once that was done, electric prices climbed even higher. Not a surprise. If California was not connected to the Grid and was an energy island, I suspect a similar cost issue. Update on Hawaii’s “Green New Deal” March 2024: http://dickstormprobizblog.org/2024/03/20/hawaii-a-glimpse-into-the-future-of-the-green-new-deal-aka-inflation-reduction-act-here-is-an-update/
Thanks again for your enlightening articles.
Thank you for your on-point commentary. As I continue to learn how decisions are made regarding our power grid, I become more and more cynical. I now imagine a bunch of economic elites sitting around a big conference table, perhaps smoking cigars and sipping port. They are developing policies to increase the cost of a necessary of modern life, electric power while they are laughing and patting each other on the back. The really sad thing is the relevant federal and state regulators are in the same room, agreeing with the elites.
Almost in tears, but decided to laugh instead. So Absurd.
Follow the money! Buffett's PacifiCorp has sold almost a billion dollars of electric power into California since November, 2014. https://www.westerneim.com/Pages/About/QuarterlyBenefits.aspx His scheme uses a daily spot market he helped set up. The daily spot market exploits a loophole in California SB 1368, (Perata, 2006) which sets an emission limit for imported power. However, SB 1368 only applies to long-term power supply contracts - greater than 5 years!
Since I live on the East Coast, I don't feel entitled to express an opinion on the composition of the CAISO Board of Directors. But let me allay your concerns that if this were to happen it could lead to the elimination of California's subsidies for Diablo Canyon.
For one thing, CAISO is, and always has been, subject to federal jurisdiction. All wholesale sales of electricity in California have been deemed to be in interstate commerce since the 1950s or 60s. Anyone who thought they were harmed by the subsidies could attempt today to have them terminated.
But there is little danger of that. Hughes v Talen applies only to a narrow type of subsidy in which the subsidized generation is required to offer into the markets at a set price. There are all kinds of subsidies for different types of generation that do not run afoul of that case. Most relevant here, Illinois and New Jersey implemented Zero Emission Credits (ZECs) to subsidize nuclear power plants, and both of these programs were upheld in court.
Matt, please see my comment above rebutting your claims. I would be very happy to see counterexamples regarding my concerns about California nuclear power. Please send me the citations to relevant case law upholding the Illinois and New York Zero Emissions Credits.. Ideally also for New Jersey's ZEC program.