FERC Urged to Protect Consumers and the Environment in Designing Reactive Power Market

  • Nine states, including a group of 7 Democratic AGs led by Connecticut AG William Tong, submitted a comment letter to the Federal Energy Regulatory Commission urging the FERC to enhance environmental justice and ratepayer protections and adopt clean energy policies in designing a reactive power market—a market in electric power used to move electricity through the grid to respond to uneven demand and prevent blackouts. For example, the 2003 blackout that affected Northeastern and Midwestern U.S. was caused by insufficient reactive power and cost ratepayers $30 billion in losses.
  • The letter was submitted in response to a Notice of Inquiry entitled “Reactive Power Capability Compensation,” which is a step in changing the rules by which electric power generators are paid to provide reactive power. The letter argues that in designing a reactive power market and making changes to the compensation structure for reactive power, FERC should focus on not burdening ratepayers with unjust or unreasonable costs and risks and further should ensure that any changes in compensation structures are not in conflict with state clean energy policies. Currently, renewable energy resources do not generally provide reactive power.
  • The letter also notes that much of the nation’s energy infrastructure is located in disadvantaged communities and urges the FERC to take into account environmental justice considerations in its market design.