The Sierra Club’s Environmental Law Program recently saw a great payoff to its work on uneconomic self-scheduling practices. On February 1, 2024, a Louisiana Public Service Commission (LPSC) Administrative Law Judge found that the Cleco Power LLC’s (Cleco’s) and Southwestern Electric Power Company’s (SWEPCO’s) Dolet Hills Coal Plant unreasonably “self-scheduled” its operations between 2019 and 2021, scheduling the plant to produce and sell energy even when more expensive than other available resources. As a result of its uneconomic operation, the Judge recommended $128 million and $167 million in refunds to Cleco and Swepco rate-payers, respectively. At least one Louisiana Commissioner, Davante Lewis, has expressed an intent to affirm the judge’s recommendation, and has serious concern about the practice of uneconomic self-scheduling.
Self-scheduling is the practice in which utilities can schedule a unit to be operated in the energy market even when lower-cost resources are available and market prices are unable to cover the fuel and operational costs of running the unit. These utilities pass along the losses from these inefficiencies to captive rate-payers, making energy hundreds of millions of dollars more expensive for customers than it should be and allowing utilities to continue operating dirty coal plants even when they are uneconomic.
Ending the practice of uneconomic self-scheduling will immediately reduce pollution. When electric system operators choose the least-cost resources first, cleaner power generators will be used before coal units. A reduction in use of uneconomic coal plants will lead to lower revenue for utilities, ultimately encouraging their retirement.
The Sierra Club’s Environmental Law Program (ELP) has repeatedly voiced concerns to the LPSC regarding uneconomic commitment of Louisiana coal plants–precisely the same arguments that Commission Staff and the Judge adopted in this case. For example, during the 2018 to 2019 Integrated Resource Plan cycles for Cleco, Entergy, and SWEPCO, ELP critiqued uneconomic self-scheduling practices at 2 of Cleco’s units, 3 of Entergy’s units, and 2 of SWEPCO’s units. Similarly, in the Cleco-NGR Merger docket, Sierra Club filed expert analysis critiquing Cleco’s self-scheduling practices at Dolet Hills. ELP’s expert demonstrated that Cleco’s coal fleet was already uneconomic, and that acquisition of additional uneconomic coal assets was likely to increase risk for ratepayers. ELP settled the Merger case with a commitment from Louisiana Generating LLC to cease burning coal at its Big Cajun II unit 1 by the end of 2024 and a commitment to operate Dolet Hills only seasonally (note: Dolet Hills officially retired at the end of 2021– an excellent example of how ending the practice of economic self-scheduling can lead to the retirement of coal plants).
ELP has been advocating against uneconomic self-scheduling for the past five years across many different states, including Missouri, Arkansas, Indiana, Michigan, Texas, Minnesota, Wisconsin, Georgia, Oregon, California, New Mexico, and Mississippi. The recommended order out of Louisiana should set a standard for advocates to point to in other states where ELP continues to fight uneconomic dispatch of coal in state public service commission proceedings.
Sierra Club’s Louisiana efforts are led by Senior Attorneys Joshua Smith and Tony Mendoza and in-house expert Jeremy Fisher, and assisted by Legal Assistant Ashley Soliman. Sierra Club’s work on self-scheduling in energy markets has been led by Managing Attorney Kristin Henry, former Sierra Club leader Al Armendariz, and ELP attorneys Rose Monahan, Laurie Williams, Megan Wachspress, and Sunil Bector.