A proposed trading platform for 15 utilities across the Southeast — the Southeast Energy Exchange Market (SEEM) — took effect after the Federal Energy Regulatory Commission again deadlocked on a major policy issue.
SEEM, set to be operating in a dozen states by mid-2022, is expected to produce up to $50 million in annual savings in the near-term by allowing market participants to more efficiently buy electricity, according to the utilities behind the plan.
SEEM opponents on Wednesday urged FERC to make sure the market evolves beyond the proposal. "The failure of some of the largest monopoly utilities in the country to convince a majority of commissioners that SEEM is legal is yet another reason why it cannot be the last step towards wholesale market reform in the Southeast," Maia Hutt, a Southern Environmental Law Center attorney, said in a statement.
Two weeks after deadlocking on the PJM Interconnection’s revised minimum offer price rule, FERC, which has four sitting commissioners, was unable to get a majority to agree on another major policy issue.
"Commissioners are divided two against two as to the lawfulness of the change," FERC said in a notice released Wednesday. As a result, SEEM took effect on Oct. 12.
SEEM will make the existing bilateral wholesale electricity market in the Southeast more efficient, eventually producing up to $150 million in annual savings as renewable energy levels in its footprint rise, Southern Co. said when it proposed the market in February on behalf of utilities in the region (ER21-1111).
The Southeast lacks an organized wholesale power market and utilities sell electricity to each other in bilateral deals, often by phone and with the shortest transactions being an hour long.
The planned SEEM is a 15-minute energy market that will match utility participants with low-cost energy to serve their customers across parts of 12 states, according to its proponents.
"Southeastern electricity customers will see cost, reliability and environmental benefits," Southern said in a statement Wednesday.
Environmental groups, renewable energy advocates and others wanted FERC to reject the proposal, arguing it lacks adequate market oversight and fails to give non-utility generators an opening in the region. They had urged FERC to hold a technical conference to explore "true market reform" in the Southeast.
"The SEEM proposal is not a real market, and it will only serve the interests of entrenched monopoly utilities," Gizelle Wray, Solar Energy Industries Association regulatory affairs director and counsel, said in a statement Wednesday. "This proposal will embolden utilities to put up roadblocks for independent power producers and will slow our transition to clean energy."
Besides Southern, other initial SEEM participants are expected to include Dominion Energy South Carolina, Duke Energy Carolinas, Duke Energy Progress, PPL Corp.'s Louisville Gas and Electric and Kentucky Utilities, the Tennessee Valley Authority as well as cooperative and municipal utilities.
SEEM does nothing to change the status quo, with its utility backers controlling nearly all the generation across the region, according to Jeff Dennis, managing director and general counsel for Advanced Energy Economy (AEE), a trade group that opposed the proposal.
"They've created a platform that mostly works for their generation assets," Dennis said. "It really does nothing to give customers access to more supplies to improve competition among generating resources in the region, or to improve access to the transmission system."
Parties in the case will likely ask FERC to reconsider its decision, Dennis said, noting AEE is considering its options. Rehearing requests are a required step before asking an appeals court to review a commission decision.
Rehearing requests are due in 30 days and FERC then has another 30 days to respond to them. In upcoming filings, FERC's four sitting commissioners will explain their views on the SEEM proposal.
There are other issues at FERC that likely have 2-2 splits between commissioners, but unlike the SEEM proposal, the agency doesn’t have deadlines for making decisions in those cases, according to Dennis.
The Senate Energy and Commerce Committee is holding a hearing on Oct. 19 to consider Biden Administration nominees, including Willie Phillips, a Democrat who was tapped to fill FERC’s vacant seat. With its packed legislative schedule, it is unclear how soon the Senate could vote on the nominees.