The Energy Markets Podcast

Diana Moss, an economist and Director of Competition Policy at the Progressive Policy Institute, advocates applying antitrust policy throughout the economy for the benefit of consumers. The former FERC economist and former president of the American Antitrust Institute warns that remonopolization of the energy industry, along with the greater consolidation throughout the economy the result of regulators stepping back from antitrust enforcement, is contributing to the "epic cost of living crisis" that's become a major political issue for the midterms.

"Consumers are left completely on the side of the road in terms of being protected because that's not happening right now. We're not seeing the agencies or the sector regulators promote competition and protect consumers," Moss says.

The impact is being worsened by the Trump administration's efforts to insert itself into energy markets to effectuate desired outcomes, she says. "The rollback of regulations, the refiring of old coal plants, the shutting down of offshore wind, you know, fuel efficiency standards. All of this is happening in an industry where the planning horizon for firms is very long. We're not talking about a nimble industry with the ability to pivot quickly in terms of planning and expansion. We're talking about an industry that has a very long-term planning horizon. And you know, coal is gone. Coal is permanently gone. It's not coming back. [T]his disruption that the Trump administration has layered in on the energy industry is putting the industry into this state of of paralysis, and it is worsening our ability to remain competitive on the global scale. It is driving up costs for consumers."

The new poster child for consolidation in the electricity sector is the massive proposed merger between Dominion Energy and NextEra Energy, which would create the largest utility in the country. Federal antitrust regulators have already signed off on the merger, leaving sector regulators like FERC and state utility commissions to protect the interests of consumers, she says. She notes that the companies' primary justification for their consolidation rests largely with the prospect of producing economies of scale that drive down costs, particularly in terms of meeting anticipated demand from the data center buildout. "But you know the question is, what are the costs of that in terms of increased market power and ability to affect rates and who builds what and where and who gets access to those markets?"

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Dan Becker has been a decades-long advocate for policies addressing the climate disruption that is occurring because of the accumulation of man-made greenhouse gases in the atmosphere, first at the Sierra Club and today with the Center for Biological Diversity's Safe Climate Transport Campaign.

Becker says a decades-long misinformation campaign that he attributes to oil and auto industry interests is responsible for the legions today who question the fact-based science and agree with the president that climate change is a "hoax."

The industry interests long understood that climate "was not necessarily very good for their profits, for their continued sales of the commodities that they wanted to get sold, nor for the trillions of dollars of subsidies that the fossil fuel companies receive," Becker says. "So they mounted a big campaign to try to convince -- I don't think the people, because I don't think that they thought that the American people or people around the world were going to be the problem. They were focused on decision making, and they recognized that members of Congress, for example, run expensive campaigns, and they need a lot of money for those campaigns. And so, in addition to lies about the science, I think the key weapon was campaign money, and the Republican Party in particular came to rely substantially on fossil-fuel industry campaign contributions to run their very expensive campaigns."

Despite the long-stalled progress on climate action, Becker remains optimistic that there is still time to address the problem before the already steady drumbeat of climate disasters becomes truly catastrophic.

"I think we have already committed ourselves to a very substantial warming. It's up to us to prevent it from being catastrophic," he says. "And the things that we need to do are not radical things. They're using less oil, burning less stuff, making our cars go further on a gallon of gas, or on electricity instead of gas, shifting to renewables -- they're very sensible steps that will save money, will create jobs, and will protect our lives and our children's future all at the same time."

In his current role promoting climate-safe transit, Becker says U.S. automakers are making the same mistake with Chinese electric vehicle manufacturers that they made in the 1970s, which resulting in a big loss of market share to the upstart Japanese carmakers. Today, by ceding the EV market to China, U.S. automakers are setting the stage to becoming uncompetitive in the rapidly growing world market for EVs, he warns.

"Already the Chinese are making vastly more EVs than the American manufacturers," he says, calling it "colossally stupid for the American auto companies to behave the way they're doing."

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Elisa Wood, founder and editor of the newsletter Energy Changemakers, has covered the evolution of consumer-empowering technologies such as microgrids, demand response, rooftop solar and battery storage and vehicle-to-grid for more than a dozen years. There is perhaps no one more qualified to discuss these emerging consumer-empowering electricity options and the forces working against their adoption.

In a wide-ranging discussion, Wood notes the headwinds facing these technologies but is overall optimistic about the future. The traditional regulatory framework for monopoly utilities, a vestige of the 19th century, rewards utilities for building big projects that provide shareholders big returns under the rate-regulated model, leaving these corporations with little financial incentive to invest in these smaller-scale technologies. Nevertheless, while there's little near-term prospect of changing the regulatory paradigm, Wood is optimistic that technology will ultimately drive change.

"I think that the champion is technology," Wood says. "You have commercial/industrial customers putting in microgrids, even though it's not a real hot year for them. It's going to come back, and you've got virtual power plants, you know, coming to the fore. Community solar coming to the fore. All these things are competing with utilities. So the competition came. I think it just came through new technology, and I think that's only going to grow. Those technologies aren't going away."

Another driver is rising electricity costs, which have become an election-year issue. 

"I think we're on the verge of something big," she says. "It's a tough time because the Trump administration, you know, has gotten rid of incentives and whatnot and kind of created a lot of tumult for the industry . . . but I feel like the consumer impetus is there and the technology is there waiting for it. So I'm actually pretty bullish right now."

Wood sees all of these multiplying technologies "eating away" at the hold giant utilities have on the system, noting increasing consumer interest and municipalities investing in these technologies, which is creating a bottom-up approach to changing the utility system, more so than regulatory reforms. 

Regulatory reform is "really hard because (utilities) have the lobbyists," she says. "They have all the money to go in there to the regulatory agencies and influence them. And who can possibly compete with that? Who's out there that can compete with that? There's really no other entity, right? So regulation has to be changed from another direction. And I really believe it's going to be from more the consumer choosing something else and forcing the utility to change, or basically taking away their customer base, you know, so that they have to change. I think it's going to come from that direction."

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John Farrell, director of ILSR's Energy Democracy Initiative, sees municipal ownership of utilities as an answer to the abuses consumers suffer at the hands of investor-owned monopoly utility companies. But he also sees competitive markets as enabling the sorts of local self-reliance his organization promotes.

"I think the lesson we've seen from the way that we regulate monopoly for-profit utilities is that we need a lot more discipline from competition because our belief that regulation would mimic competition, which is how it's supposed to work, that's the theory behind it, is that it's not working at all," Farrell says. "These companies are making far much greater profit than they would if they were in a competitive market, and they've often used the monopoly power that they have to restrict competitors for entering. So I'm a big believer that competitive markets are an important component of how we solve the energy problems we have today."

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The U.S. nuclear industry is enjoying a robust turnaround, largely driven by interest in emerging new nuclear technologies, such as small modular reactors. Judi Greenwald, president and CEO of the Nuclear Innovation Alliance, talks about the many different innovative technologies developers are pursuing, the administration's strong support both new and traditional nuclear technology and her NGO's efforts to reform burdensome and costly Nuclear Regulatory Commission licensing and oversight requirements. 

Amid all the rush of developments in new nuclear, the alliance looks forward to a time when new nuclear, like, what happened with variable renewables "will be able to really take off and stand on its own," Greenwald says. 

"We do have to go through this process that we do in our country to make sure that it's got the policy support so that we can get through and innovate in the way that we do. So we're very excited," she says. "There's a lot of work to be done, and it's not clear which companies are going to win in the end. We think it'll be more than one because there are so many different use cases and so many different ways towards success. But not all of the companies and technologies that are playing now are going to win out in the end, and that's okay. What matters is that we have a robust portfolio. We're pursuing multiple ideas collectively and individually. It's a bit of a competition as well as a mutually reinforcing game, but it's it's an exciting moment, and we're really glad to be part of it."

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Despite increasingly catastrophic weather events occurring across the globe, climate change expert Paul Bledsoe is optimistic there is still time to ward off the worst of climate disruption caused by emissions of greenshouse gases, but time is running out. And he sees reducing what he calls "super pollutants," such as methane and HFCs, rather than simply reducing CO2 emissions from fossil fuels, as offering the most efficient appraoch to stemming the worst of the worst when it comes to climate disruption.

"If we can just over the next 20 years reduce these super pollutants, begin to reduce CO2, I think we can just stave off the worst," he says. "We can prevent the true catastrophe, but we need to act, and we need to act more urgently."

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The data industry is in a land rush to develop new data centers to meet projected demand due to artificial intelligence. Rapidly bringing many new, large data centers online translates into a sharp increase in demand for electricity at a time when consumers and politicians are concerned about rising electricity prices. At the same time, communities and their political representatives are increasingly working to block the siting of data centers in their communities.

The industry is attempting to meet "unprecedented demand for the services that are powered by data centers" as the amount of computing time and computer power by users has grown dramatically since the pandemic, says Aaron Tinjum, executive vice president for policy, regulatory, and strategy at the Data Center Coalition. "That's even setting aside any sort of conversation around artificial intelligence, and really a point of emphasis in all of that is that it is homes and it is businesses, it is utilities that are necessitating more data center infrastructure than ever before, and so our members are working to meet that demand."

Tinjum sought to push back against the data industry being tarred as a primary cause of increasing electricity prices, noting that there are so many other factors contributing to the recent upsurge in electricity costs, such as generation shortfalls, transmission constraints, and supply chain issues. "Yes, data centers have had an impact on capacity prices, but that can't solely be assigned to data centers when we're talking about things like market design, we're talking about things like price caps, we're talking about accelerated plant retirements, and the interconnection backlogs to connect any new resources that would offset the reduced supply side resources," he says.

"This is really infrastructure that our modern economy and daily lives have become dependent upon, and one of the most necessary inputs in meeting that demand is electricity," he notes. "Energy is the single highest operating expenditure for a data center, so they are naturally incentivized to be as efficient as possible in addition to whatever sustainability commitments they may have already in place." 

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William S. Becker, the executive director of the Presidential Climate Action Project and a former Department of Energy official, discusses the fossil fuel industry "cartel" that has aligned itself with congressional Republicans and the Trump administration to frustrate concerted policies in response to the threat from climate disruption.

"It's a huge industry. It's got a tremendous sunk investment," Becker observes. "It's been around for 200 years. It's fighting to keep access to something on the order of, well, tens of trillions of dollars of fossil fuels that are still underground. Science is saying that about two thirds of them have to stay there in order to keep climate change under some bearable level, at some bearable level. So it began late in 1989, the fossil energy industries and companies formed a coalition to begin resisting climate science and discrediting it, and we've been at this ever since."

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The Insurance Information Institute's Chief Economist, Michel Leonard, discusses how the insurance industry is contending with increasingly intense and more frequent extreme weather events that are driving up insurance costs for consumers. While there are a number of factors driving cost increases for insurance, such as inflation, there's no doubt that extreme events driven by human-caused climate disruption is a principal factor, Leonard says.

Climate is the one of most critical issues affecting the insurance industry, he says. "It's the make or break of our industry."

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Energy Markets Podcast host Bryan Lee explains why he has returned to publishing regular episodes of the podcast after a two-year sabbatical. "I feel compelled to return," Lee says, citing "the looming threat of a retreat from electricity regulatory reforms that have provided billions of dollars in benefits to consumers."

Lee also draws on his long career in energy and environmental policy to provide the history of competitive reforms over the past 30 years intended to replace monopoly regulation of electricity prices with market-based pricing. 

"While the decades-old model for competitive electricity markets needs to be improved, we shouldn't lose sight of the benefits we've derived – billions in consumer savings and a consistently cleaner electric industry," Lee says. "It would be a tragedy if we returned to monopoly regulation rather than take the steps needed to make the markets work better."

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