Here’s why the Southeast Energy Exchange Market is a concern

A number of utilities in the US Southeast want to create the Southeast Energy Exchange Market (SEEM). They filed a proposal to the Federal Energy Regulatory Commission (FERC) in February, and they want an approval by May 13. The nonprofit advocacy group the Southern Alliance for Clean Energy (SACE) explained why SEEM isn’t a good move for the transition to green energy or reducing energy costs.

The funny thing about utilities is, the vast majority of the population don’t know a lot about them, yet they directly affect every single person who uses the energy the utilities sell – and that’s why this is important.

What’s SEEM?

The Southern Alliance for Clean Energy’s director of utility reform, Maggie Shober, explained the exchange market proposal in a blog:

Southeastern utilities can already buy and sell power from each other, they just have to use an antiquated system to do so — pick up the phone and call to schedule the purchase. The proposal currently under discussion would be an upgrade to that system, not a move to a full-on market. Utilities would be able to submit a bid to provide or purchase power and have an algorithm automatically match them together.

There would be no governing board.

All sales would remain voluntary and would be ultimately up to each utility. This is different from every other energy market construct in the country.

Which utilities are involved?

As of February 12, 2021, “SEEM Members” includes Alabama Power, Georgia Power Company, and Mississippi Power Company (collectively, “Southern Companies”); Associated Electric Cooperative, Inc. (“AECI”); Dalton Utilities (“Dalton”); Dominion Energy South Carolina, Inc. (“Dominion SC”); Duke Energy Carolinas, LLC (“DEC”) and Duke Energy Progress, LLC (“DEP”) with DEC and DEP collectively referred to as “Duke”; Louisville Gas & Electric Company (“LG&E”) and Kentucky Utilities Company (“KU”) collectively (“LG&E/KU”); North Carolina Municipal Power Agency Number 1 (“NCMPA Number 1”); Power South Energy Cooperative (“PowerSouth”); North Carolina Electric Membership Corporation (“NCEMC”); and Tennessee Valley Authority (“TVA”).

There are also potential SEEM members that are not officially part of the SEEM filing at FERC but are considering joining SEEM. Potential SEEM Members as cited in the filing are Georgia System Operations Corporation (“GSOC”); Georgia Transmission Corporation (“GTC”); Municipal Electric Authority of Georgia (“MEAG Power”); Oglethorpe Power Corporation (An Electric Membership Corporation) (“Oglethorpe”); and South Carolina Public Service Authority (“Santee Cooper”).

So what’s the problem, and why should US Southeast residents care?

Shober explains:

States in the Southeast continue to have some of the highest electricity bills in the country. An unacceptable combination of low incomes, a general lack of investment in energy efficiency, the prevalence of the need for electricity to provide both heating and cooling, and monopolistic utilities that are insulated from customer pressure have led states in the region to consistently appear among the worst in terms of energy burden (energy costs as a portion of household income).

The SEEM proposal would not even scratch the surface of these issues. If the utilities’ claims of the benefits of SEEM are to be believed, and $40 million in annual savings is spread across the entire SEEM footprint, we estimate that could lead to, at most, a savings of $1/year for residential customers served by SEEM utilities. Most likely the impact would be lower.

How would SEEM impede clean energy?

There are two main reasons the Southern Alliance for Clean Energy thinks the SEEM proposal would obstruct clean energy:

The SEEM proposal lacks the ability for independent or small developers or projects to participate, and would not change how utilities plan future resources (i.e., would not change how Southeast utilities develop their Integrated Resource Plans), so will not lead to additional renewable energy on the grid, offset the need for planned new gas plants, or drive utilities to retire coal plants earlier than currently planned. Even the claims that SEEM would help to integrate existing renewables, particularly by leading to less curtailment of solar energy, are suspect. So in this regard, we don’t see SEEM as a driver of clean energy.

It is possible SEEM could derail true market reform efforts if allowed to move forward in its current form. In our protest filed with allies, we detail all the examples of Southeast states and localities that are considering electric market reforms. If SEEM is approved, it could derail these discussions and either prevent or delay the kind of market reforms that could drive a significant increase in future renewable energy, accelerate the retirement of coal and gas units, and cause the cancellation of new gas plants before they are built.

What needs to happen instead?

In an earlier blog posted in July 2020, Shober wrote that for true emission reductions, a market in the Southeast would need at least the following three things: 

Wholesale generation competition with complete transparency and complete divestment of existing generation resource to remove bias toward incumbent utilities.

Combined regional resource and transmission planning to eliminate redundant proposals for new generation and open up existing power plants to competition with new resources.

Involvement from state policymakers to ensure state clean energy policies are met

To read Maggie Shober’s blog, “Southeast Energy Exchange Market (SEEM): What we know, Q&A-style” in full on SACE’s website, click here.

Photo: TVA dams in 1935