EPS Ep. 4: Travis Kavulla on combating bailouts and the 'pernicious alliance' between greens and utilities
America's wholesale power markets are built on the premise of competition, but in recent years that foundation has faced threats from all sides.
States, unhappy with the gas-heavy fuel mix markets have delivered in recent years, are taking action to preserve nuclear plants and boost renewable energy. Large generators are pushing multiple market reforms to keep their uneconomic plants online, and the specter of a Trump administration coal bailout still looms over Washington.
One newcomer to "The Swamp" hopes to stem that tide. Travis Kavulla, the former vice chairman of the Montana Public Utilities Commission, recently moved to D.C. to head the energy policy shop at the R Street Institute, a libertarian think tank.
He spoke to EPS in November about how he hoped to create a cross-partisan movement for competition and clean energy.
"My being here in a right-of-center position really is an attempt to be a clarion call to people on my side to oppose bailouts," he said, "also a call to the other side to stop making policy through this sometimes pernicious alliance between ratebase-oriented utilities and environmentalists who just want to get a 'W' no matter how much it costs."
Instead of administrative bailouts or ambitious renewable energy policies, Kavulla said policymakers should focus on expanding choice to customers who increasingly demand clean energy.
"People are fed up with having regulated monopolies' balance sheets used as playthings by policymakers," he said. "They don't understand why they can't choose their own source of supply, they don't understand why uneconomic plants are receiving bailouts by politicians when there are least cost options available."
"We constantly hear from the left that consumers left to their own devices will choose the cleaner and greener energy portfolio," he added. "I agree with them and I believe that's true so we shouldn't be countenancing policies that make that choice less feasible or more expensive."
Advancing customer choice, he argued, will result in lower cost carbon reductions that can be more palatable to the public.
"It's been frustrating to me to watch a conversation that should be about targeting the thing that we have in mind — carbon emissions — be redirected on things that may or may not reduce carbon emissions or may reduce them more costly than alternatives," he said. "We will continue to see mandates passed by state legislatures that are some of the most cost inefficient ways of abating carbon emissions."
Kavulla also spoke about his vision for wholesale power market reform and the chances for an integrated electricity market in the American West. The episode was recorded onsite at the 2018 annual conference at the National Association of Regulatory Utility Commissioners.
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