Electricity ratepayers are fed up with skyrocketing electricity bills and the increasing threat of blackouts. We are tired of a system that prioritizes unreliable energy and corporate profits over consumers. Our electric grids, managed by regional transmission organizations (RTOs), are breaking down – because they favor subsidized renewables which drive up costs, reward unfair bidding practices that sideline dependable power plants, and drive up profits on subsidies and premature plant closures.
We need urgent reforms to fix RTO bidding rules, curb unfair wind and solar subsidies, and stop utilities from profiting off premature plant closures and government subsidies. These changes will deliver affordable, reliable electricity and protect ratepayers from an expensive and failing system.
RTOs ensure electricity supply matches demand to prevent blackouts, but their bidding process is rigged. After bids are accepted, electricity generators get paid the highest price the RTO takes, not their actual offer price, called the take-and-pay system. They pay the clearing price, not the bid price. Other industries with multiple suppliers wouldn’t pay them all the highest price they take.
Heavily subsidized renewables backed by federal and state handouts flood electricity auctions with low bids, which will hopefully end with the passage of the “Big Beautiful Bill.” Their intermittent output, delivering just 18% to 40% of nameplate capacity – and only when the wind blows or sun shines – gets prioritized, and is often mandated by renewable standards which get paid the highest price taken in the bid, and not their subsidized low bid.
Equally infuriating is how utilities exploit subsidies at ratepayers’ expense. Government handouts for wind, solar, batteries, transmission and carbon capture let utilities build massive projects with taxpayer money, yet they claim an 8% to 10% guaranteed “capital rate of return” on these subsidized investments, charging us profits on funds they won’t even spend.
For example, a utility building a solar farm with 50% federal funding still pockets profits as if it gets paid the full cost. Reforming this means banning profits on subsidized portions of projects, which will mean ratepayers aren’t gouged to pad corporate profits, saving billions for ratepayers from the $559 billion in projected subsidy costs.
Worse, utilities are shuttering reliable coal and gas plants – often with decades of life left – to chase these profits. When they close a plant early, they still claim 8% to 10% returns on stranded debt or capital costs.
We need reforms that would stop rewarding early closures by banning guaranteed returns on voluntarily retired plants. Instead, offering rate of returns for extending the life of coal, gas and nuclear generation plants because the lowest cost option, as reliable electricity comes from plants that have paid off their capital costs, like how paying off your mortgage lowers your house costs. This will keep reliable power online longer, maximizing investments, lowering consumer costs and stabilizing supply.
In most RTOs, generators submit bids to supply power, but are often limited to fuel costs, maintenance, operational costs, and profit. Other industries don’t do this. Bids that include actual costs to generate electricity must be allowed by RTOs, if we want reliable grids, which unfairly favors wind and solar because they have no fuel costs.
Reforming RTO bidding is critical. Paying all generators their actual bid price, not the highest one, would restore fairness and save money. Additionally, discounting payments to intermittent sources like wind and solar by 33% from the highest priced electricity taken or their bid – whichever is less – would save money and reflects their lower value to a grid that demands constant supply to ensure reliability.
Reliability must be paid for if we want to keep it.
Europe’s over-reliance on renewables has led to electricity rates three to four times ours, coupled with frequent outages. We can avoid this by ensuring dispatchable plants – those that deliver power on demand – stay online. These reforms will lower costs, boost competition, and keep the grid stable, especially as demand surges from AI data centers and electrification.
These reforms deliver clear benefits, as fairer bidding will cut electricity costs by aligning payments with actual bids, and not the highest bid. Prioritizing reliability will prevent outages and protect communities and businesses, while curbing profits on subsidies and early closures will save ratepayers billions while ensuring utilities focus on services, not gaming the system. Encouraging long-lived plants will maintain grid stability without over-relying on weather-dependent sources.
This is about building grids that we can afford, that are reliable, that don’t reward utilities for gaming the system they helped create, and this ensures grids that work all the time, not just when the sun shines or the wind blows.
Lawmakers must champion these reforms to restore fairness, reward reliability, and deliver the affordable, dependable power we rely on before it slips away.
This article was originally published at www.thecentersquare.com
