Rebecca Kling, rebecca.kling@sierraclub.org
ST. LOUIS, MO -- A peer-reviewed analysis of coal-fired power plants operating in markets across the United States, released by the Sierra Club earlier today, finds that many coal plants in market regions operate uneconomically and more than warranted by market conditions. The report, Playing with Other People’s Money: How Non-Economic Coal Operations Distort Energy Markets, shows that captive customers of coal-owning regulated utilities operating in competitive wholesale energy markets lost $3.8 billion dollars between 2015 and 2017 due to the out-of-market operations of coal plants.
This problem continues today, and is almost completely isolated to coal plants operated by rate-regulated utilities, which receive compensation from captive consumers, regardless of market revenues. The practice of non-economic dispatch by coal plants suppresses competition, leaves captive utility customers vulnerable to excessive and unnecessary charges by their utility, and denies customers the benefits of less expensive electric power.
“State and federal energy regulators are being played by regulated electric utilities,” said Dr. Jeremy Fisher, senior strategy and technical advisor in the Environmental Law Program at the Sierra Club, and lead author of the report. “In a functional market, basic economics dictate that higher marginal cost coal plants shouldn’t operate often--or at all--and incentivizes less expensive and more efficient energy generation. Unfortunately, when utilities have different regulators for market oversight and for rate recovery, there’s little incentive for those utilities to operate their generators in the best interest of customers.”
“Market regulators mostly assume that utilities provide fair bids for their energy, and commissions trust the market to bring consumers the lowest-cost energy,” said Casey Roberts, a staff attorney with the Sierra Club's Environmental Law Program. “The data, however, shows this trust is not always well-founded. In some regions, market manipulation has allowed coal power to appear competitive long after more affordable energy sources should have pushed coal out of the market.”
Click here for more information, including links to blog posts about this report.
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with more than 3.5 million members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.