COMMENTARY: It’s time to fix the electric grid

Many are concerned with electricity price hikes and looming blackouts, and many are fed up with a system that prioritizes ideology and utility profits over reliability. Our electric grid is the backbone of modern life — powering hospitals, homes and businesses — but it’s being undermined by flawed policies in our organized electricity markets.

Regional Transmission Organizations, tasked with ensuring reliable, affordable electricity, are stuck in an anti-competitive mess that favors subsidized renewables over dependable power. This isn’t just bad economics; it’s a recipe for disaster. We need bold reform to restore fairness, protect consumers and keep the lights on.

RTOs manage vast electric grids, balancing supply and demand to prevent blackouts. They procure electricity through competitive bidding, where generators submit offers to supply power. Here’s the catch: Most RTOs use a “clearing price” model, paying all accepted generators the highest winning bid, not their actual bids.

Other industries don’t pay the highest bid accepted to all suppliers. They pay the offered price of each supplier they accept.

A coal or gas plant bidding with unfair rules that prevent them from using their actual costs, including profit, gets paid the same as subsidized renewables that bid lower. They are all paid the highest cost the RTO takes. This “take-and-pay” system inflates prices, distorts markets, is anti-free market and punishes reliable, on-demand power plants.

Wind and solar, while part of our energy mix, are intermittent, producing power only when the weather cooperates. Their capacity factors — how much power they generate compared with their potential — range from a meager 18 percent to 40 percent. Yet government subsidies and renewable portfolio standards let them flood RTO markets with low bids.

Worse, RTO bidding rules often restrict dispatchable plants — natural gas, coal and nuclear — from including facility costs, making them unprofitable. Many shut down, leaving us vulnerable to blackouts when renewables can’t deliver.

Look at Europe, where heavy renewable reliance has led to electricity rates three to four times higher than ours and frequent grid failures. Spain’s April blackout, affecting 55 million, showed what happens when grids lean too hard on weather-dependent power without enough dispatchable generation.

We’re on the same path unless we act.

Our current system overpays renewables for unreliable energy while sidelining the on-demand plants that keep the grid humming. This isn’t competition — it’s market manipulation that hikes consumer bills and risks widespread outages.

We need legislation to fix this broken system.

First, RTOs must pay generators their actual bid prices, not the highest accepted bid. This levels the playing field, rewards efficiency, and stops overpaying intermittent wind and solar.

Second, we must address the unfair advantage of intermittent sources. Wind and solar should receive discounted payments reflecting their lower value for keeping our lights on. Electricity that’s variable and weather-dependent isn’t worth the same as reliable, on-demand power.

Finally, we need to fairly compensate dispatchable plants for their capacity and grid inertia. This will ensure they remain viable to meet demand when wind and solar falter. Which is often.

These changes aren’t anti-wind-and-solar; they’re pro-reliability and pro-consumer. Wind and solar can still compete, but not at the expense of grid stability or affordability. Without reform, we’re gambling with our energy future, inviting blackouts and skyrocketing rates.

The data is clear: Grids need dispatchable power to function. In 2023, the U.S. Energy Information Administration noted that natural gas and coal provided 60 percent of our electricity, stepping in when renewables couldn’t and when electricity is needed most, when it is very hot or very cold. On-demand generators also provide blackout-preventing inertia. We can’t afford to let these plants disappear.

Wind and solar provide zero grid inertia. Millions in Spain and Portugal learned this expensive lesson. The blackout shaved $1.8 billion from their economy and disrupted everyone’s life.

Legislatures must act now. Pass legislation to fix RTO bidding rules, prioritize reliability, and protect consumers from inflated costs.

Let’s deliver by restoring free-market principles to our electricity markets. No more subsidizing unreliability. No more risking blackouts.

It’s time to rebuild electricity grids that work for Americans, not bureaucrats, big profitable utilities, and foreign suppliers. The lights are on now — let’s keep them that way.

Frank Lasee is the president of Truth in Energy and Climate. He wrote this for InsideSources.com.