SADOW: PSC Must Protect Consumers From Alarmism

One thing is clear: unless the regional transmission organization that guides the pricing most Louisianans pay for their electricity halts its drift towards placing ideology ahead of customer welfare, the part of the state served by Entergy must find an alternative arrangement.

At last month’s Public Service Commission meeting, consultants registered a warning about the policy direction of the Midcontinent Independent System Operator. This RTO is comprised of power providers in 15 states and Manitoba, split into three regions. Entergy’s operations in New Orleans, regulated by the city, and in most of the rest of the state, regulated by the Public Service Commission, are affected; the northwest corner of the state served by American Electric Power subsidiary Southwestern Electric Power is part of another RTO called the Southwest Power Pool.

Ideally, an RTO by integrating power production across multiple providers and borders can increase reliability in provision for customers included by drawing upon more sources. However, member entities sacrifice some control over generation and pricing, most particularly on capital expenditures for transmission. Several such voluntarily organizations exist encompassing over half the states, but not areas of Mississippi not served by Entergy or the remainder of deep south states (except for a swath of North Carolina). These parts of Entergy with its Arkansas and Texas subsidiaries form one of three MISO sub-regions which have some autonomy within the organization.

Unfortunately, that separation seems to be eroding, the consultants pointed out, with MISO’s alteration last year of pricing policy. Essentially, its methodology changed allowing for costs of transmission lines to be spread out more among all members and including projects. Some $30 billion of that appears on the way and potentially followed by $100 billion more. In essence, the consultants think the decision on the initial tranche rushed and with insufficient due diligence to determine whether the costs, outside the south region, eventually will spill into rates paid in that region. Theoretically under present policy, cost sharing among regions would occur with Louisiana receiving little direct benefit.

Making matters worse, the reason for the huge rollout in increasing pressure from providers and politicians in other states enthralled with Climate Derangement Syndrome, or the belief, not verified scientifically, that unless a huge shift into renewable energy occurs quickly global catastrophe will unfold. This climate alarmism already has infected New Orleans political elites, who have signaled they agree with MISO’s plans to escalate dramatically transmission buildout, necessary because operators want to retire nonrenewable energy forms in favor of the renewable kind.

Of course, this creates a double-whammy; not only would Louisiana ratepayers get stuck with paying for a portion of this new transmission from (essentially) land-based wind power thousands of miles away when most of these costs could be avoided by sticking to nonrenewable power generation – keep in mind there is no scientifically-justified imperative to move massively into renewable sourcing – but also they would see higher bills when the higher-priced renewable power makes its way into the MISO provision stream. After all, while new wind power is a bit less expensive per unit over the life of the project than the common form of combined cycle natural gas generation, it is half as reliable and adding the battery storage necessary even to get it close to the same reliability (and it won’t be, as batteries only hold a few hours’ worth of juice) makes it 150 percent more expensive.

This threat to Louisiana consumers’ pocketbooks led Republican Commissioner Eric Skrmetta to have the PSC vote on starting the process of giving MISO a notice of withdrawal at this week’s meeting. However, the matter didn’t come to a vote as Skrmetta appeared to be the only one wanting to take the matter that far that quickly.

The objection at least from Republican Craig Greene centered on the state’s alternatives. Entergy – which originally drew the state into MISO as a deal to relieve U.S. Department of Justice pressureclaims it has saved over a billion dollars over the years since 2013, to consumers’ benefits. Greene didn’t support a move out until researching alternatives, and Skrmetta has pledged to have a look at joining another RTO (almost certainly SPP) by staff.

But the problem there is SPP is further down the road to a renewables commitment that maximizes cost sharing, where the buzzword increasingly forwarded for inclusion in benefit/cost calculations is “resilience,” or an explicit interjection of “costs” from an ideologically-defined impact of “climate change.” And FERC, which promotes the use of RTOs but as of just a few years ago explicitly was rejecting that kind of interjection, now appears increasingly heavy-handily attempting to foist that concept onto RTOs and interstate energy regulation generally.

As such, an organization that once created cost savings looms to become a significant burden to consumers, not for economic but ideological reasons. Thus, the PSC must undertake study of alternatives to MISO that must include taking parts or all of MISO’s midwest region to create its own RTO, enticing southern states not in an RTO to form one with MISO’s south, or go it alone as it as most of the state once had (and hope Entergy can stomach letting subsidiaries go their own ways and work out around legal obstacles from the increasingly woke DOJ).

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