The American Public Power Association published a blog post on the inefficacy and costs of capacity markets
While nothing new to our long-term readers, we do find interesting APPA's observation that a court recently struck down an EPA power grab due to the lack of a cost-benefit analysis, as APPA notes FERC flatly refused to conduct a cost-benefit analysis in the PJM capacity performance proceeding
"In Michigan v. EPA, the Supreme Court ruled that the Environmental Protection Agency acted unlawfully by ignoring costs and benefits when it determined that it was 'appropriate and necessary' to regulate the emissions of hazardous air pollutants from power plants under the Clean Air Act. A cost-benefit calculus is even more central under the Federal Power Act, which requires that wholesale rates be 'just and reasonable.' Yet FERC did not assess what benefits consumers would be obtaining, or what additional costs they would be paying, before approving the Capacity Performance construct," APPA said
APPA once again observed what we have long said. States will be hesitant to restructure their electric utilities (and offer electric choice) because once they deregulate they will be lose control of capacity decisions -- not to the market, which is what restructuring was meant to entail, but to the federal government's fiats concerning capacity costs and reserve margins. Attempts by states to regain control over their LSEs' capacity purchases will be denied.
"Call this the 'roach motel' theory of the capacity market: a state can check in (by deregulating its retail utilities), but it cannot check out," APPA said
See blog post for much more on the failings of the capacity market