Clearing up some myths about the Clean Electricity Performance Program

Right now Congress has a historic opportunity to reduce pollution, protect community health, and mitigate the climate crisis by passing the Clean Electricity Performance Program (CEPP), which would drive a transition to 100% clean electricity by 2035 - and create nearly 8 million jobs in the process. The House Energy and Commerce committee recently passed the CEPP as part of the Build Back Better Act, and just yesterday the program was endorsed by one of the country’s largest utilities - Chicago-based Exelon.

Here are several common misconceptions about CEPP and the transition to clean energy:

Myth 1: A clean energy transition would raise rates on consumers

Fact: The Build Back Better Act can enable a clean energy transition that saves consumers money. A host of studies have found that we can transition to a clean energy grid without significant impacts to customer rates compared to the costs of maintaining our fossil fuel-dependent grid. This doesn’t take into account the economic costs of climate-driven weather disasters, which cost taxpayers $99 billion last year and are likely to cost even more in the coming years.

An analysis by Evergreen Action and the Natural Resources Defense Council showed that the CEPP could even reduce Americans’ electricity bills by 5%, compared to the same power sector transformation without federal grants. That’s equal to average household savings of $70/year and nearly $600 over the program.

Gas prices are rapidly rising due to supply interruptions from climate-driven extreme weather events like Hurricane Ida, a steady increase in liquified gas exports and the long-term bust of US shale. These high costs are likely to persist and worsen in the coming years, making wind, solar and energy storage the more affordable option for utilities and consumers.

Utilities’ existing coal and gas plants are often uneconomic under the status quo, and only becoming more and more expensive for ratepayers over time. But there are many solutions available to protect consumers from having to pay more to shoulder the costs of utilities’ bad decisions, including securitization and active oversight by state and federal utility regulatory bodies.

Myth 2: The CEPP pays utilities to do what they’re already doing

Fact: Utility commitments to date fall far short of what is needed to avert dangerous climate change. While many utilities are making the switch to clean energy on their own, few are doing it at the rate necessary (or at the rate required by CEPP) to meet internationally recognized emission reduction targets. Many are actively taking measures to preserve their existing fossil fuel investments, even if it means higher rates for customers. The Sierra Club’s 2019 report Playing With Other People’s Money: How Non-Economic Coal Operations Distort Energy Markets documented examples from across the country of utilities running coal plants even when they are losing money, using  practices that disadvantage clean energy, and interfering in markets to protect their fossil fuel power plants. Nationwide, utilities are planning to build up to new 250 gas plants in the coming years, locking in decades of pollution and putting our climate commitments out of reach.  

Myth 3: Utility shareholders would get the benefits of the CEPP

Fact: The CEPP requires that its direct benefits go only to consumers and communities. Payments from the CEPP would only go to utilities that add more than 4 percentage points (p.p.) of clean energy per year to their portfolios, and the bill puts strict guardrails on what the utilities can do with those payments - "exclusively for the benefit of the ratepayer...including direct bill assistance to ratepayers, investments in qualified clean electricity and energy efficiency, and worker retention." These are direct benefits that flow to consumers and communities, not utility shareholders. 

Combined with robust clean energy tax credits, CEPP payments will cover the incremental costs of transitioning to clean energy sources without increasing rates. For utilities that have to meet state requirements, the CEPP will help them achieve those goals faster and cheaper.

Utilities that fail to meet the annual clean energy goals in the plan are penalized, but the legislative text clearly defines that those penalties cannot be passed on to the ratepayer, meaning they must come out of shareholder/owner profits.

Myth 4: Transitioning to clean energy would sacrifice reliability

Fact: The Build Back Better Act provides the tools needed to build a more diversified, clean, and reliable electric grid. Multiple studies - including from the US Department of Energy - have shown that the U.S. can achieve an 80 percent clean grid by 2030 without sacrificing reliability by focusing on geographically diverse sources of wind and solar, energy storage solutions, energy efficiency, increased transmission and smaller, more localized grids. Many states have successfully integrated large amounts of renewable energy into their grids with no issues. This week 21 grid reliability experts, including the former CEO of the PJM, the country’s largest grid operator, sent a letter to Congress outlining how “our nation’s power system reliability can be preserved and enhanced with the CEPP.” 

Several state and regional agencies guard against reliability concerns as fossil fuel plants are retired. The CEPP doesn’t actually require any power plants to close, it just requires that we rely on them less and less as we add more renewable generation over time. Some existing power plants may serve as backup resources as we ramp up clean energy generation over the next decade.

Reliability is a red herring often used by critics of clean energy who wrongly associate reliable generation with gas or coal. In February, coal and gas power plants across Texas tripped offline, putting Texas’ electric grid just moments away from catastrophic months-long outages, and resulting in as many as 700 deaths and $80-130 billion in direct and indirect costs. This experience was a tragic and powerful reminder that fossil fuel power plants are not only causing climate change, they are also vulnerable to extreme weather and fuel supply interruptions.

Myth 5: CEPP does not benefit coal-dependent states

Fact: The Build Back Better Act can reduce energy costs in coal-dependent states while adding thousands of new jobs. Coal-dependent states are facing an uncertain future amid the declining economics of coal-fired power and are likely to be among the largest beneficiaries of an orderly transition to clean energy. An analysis by the West Virginia Center for Energy and Sustainable Development found that the CEPP and President Biden’s Build Back Better plan would be an economic win for West Virginia, adding 3,500 net jobs, driving $20.9 billion in new energy investments, and expanding the state’s gross domestic product by $322 million annually. Overall, the Appalachian region stands to gain $65 billion in local wages, local tax revenues, and land lease payments from wind and solar projects that could be constructed in this decade under the CEPP.

The fossil fuel status quo is already costing West Virginia ratepayers. The state has seen electricity costs nearly double in the last 15 years due to their coal-heavy grid. WV utilities are currently pushing for a $48 million rate increase on WV customers to keep coal plants afloat, drawing opposition from local advocates like the American Association of Retired Persons. By kickstarting investment in more affordable wind, solar and energy storage technologies, the CEPP would stabilize customers’ energy costs while adding thousands of jobs.