On August 23, 2017, the US Department of Energy issued the “Staff Report to the Secretary on Electricity Markets and Reliability” (Staff Report). The Staff Report was commissioned by the Secretary of Energy to provide an assessment of the reliability and resilience of the US electrical grid. The Staff Report’s general findings are that the wave of retirements of baseload generating resources, like nuclear and coal generating plants, is being driven mainly by economic forces, particularly increased price competition from natural gas power plants and the increased penetration of renewable resources. However, a closer reading of the Staff Report suggests that other modifications to electricity market designs and the regulatory regime surrounding power generation may be necessary to stanch the retirements of coal and nuclear power plants.
As noted by Secretary of Energy Rick Perry in his cover note to the Staff Report, recent “extraordinary technological and resource changes” in electricity markets are “challenging the regulatory paradigm that has guided the industry’s growth for decades.” Secretary Perry concludes: