COVERAGE AREA and macrothesis

The power sector continues to adjust to a shifting landscape as the Trump Administration’s deregulatory agenda conspires with weak electricity demand to exacerbate power supply competition. The Environmental Protection Agency (EPA) has proposed to replace the Clean Power Plan’s limits on utility sector carbon dioxide emissions with the Affordable Clean Energy plan, and the continued absence of stricter regulatory standards removes incentives to retire older, higher-emitting assets in favor of newer, lower-emitting ones.

The organized markets overseen by the Federal Energy Regulatory Commission (FERC) continue to struggle to accommodate bottom-up state and corporate initiatives that favor lower-emitting resources, including distributed and utility-scale renewables and, in some cases, nuclear power. The Department of Energy (DOE) continues to harbor concerns regarding the national security implications of losing “fuel secure” resources such as coal and nuclear plants, but it has yet to take action pursuant to its Federal Power Act and/or the Defense Production Act authorities (and the scope and duration of such actions remains unclear).

Together, subnational efforts to increase procurement of, and reliance on, lower-emitting generation and federal efforts to preserve existing resources point towards ongoing oversupply of power resources amid still-slack demand. In some regional markets, the problem appears to be getting worse. We see growing tensions between regional wholesale market operators attempting to augment and improve their market structures and state policy makers pursuing incrementally “greener” agendas. Meanwhile, transportation electrification does not appear to be on track to balance this problem anytime soon.

Our coverage examines the regulation of generation, transmission and distribution as well as the environmental policies governing air and water emissions and solid waste streams. Clients receive as-needed research notes, reports and flash blasts regarding all of these topics. In addition, our monthly Regulated Energy Playbook for utility investors outlines key themes, examines recent legislative, regulatory and judicial developments and presents forward-looking assessments of coming events.

Updated: December 24, 2018.