Used, But How Useful?

The report argues that rate-regulated utilities use 'self-commitment' to bypass market merit order, running coal plants that are objectively uneconomic and passing the resulting losses to captive customers through state fuel-cost-recovery processes. Using PLEXOS modeling for the MISO region in 2018, the authors find that this practice cost customers $350 million and suppressed regional market clearing prices by 2.4%. The report identifies Cleco and DTE Energy as significant contributors to these distortions and recommends that state regulators disallow the recovery of imprudent, above-market costs to incentivize efficient dispatch.

• In 2018, the uneconomic self-commitment of coal plants in the MISO region resulted in costs of $350 million for customers, which equates to an average annual increase of approximately $60 on residential electric bills.
• The practice of self-committing coal plants artificially lowers market clearing prices across all MISO transmission zones, reducing the regional average by $0.63 per MWh, or 2.4%.
• While most coal resources in MISO are self-committed, a small group of companies and plants drive the majority of market distortion; Cleco (co-owner of Dolet Hills) and DTE Energy are identified as the worst actors.
• Eliminating uneconomic self-commitment in MISO would have increased the system's market surplus by 66%, rising from $1.5 billion to $2.5 billion, thereby improving overall market efficiency and profitability for power plants.
• Rate-regulated utilities can exploit the self-commitment loophole because they can recover market losses through state fuel-cost-recovery processes, a financial cushion not available to independent power providers (IPPs).
• The traditional view of coal as a 'baseload resource' is outdated; current MISO data shows coal plants often cycle to follow load patterns and frequently operate when the cost to burn coal exceeds the market price.
• Some utilities, such as Xcel Energy and Cleco, have begun reducing uneconomic dispatch by converting coal plants to seasonal operations, which the report suggests can save customers tens of millions of dollars.
• The report concludes that market rule reforms alone are unlikely to stop the behavior; instead, state regulators must disallow the recovery of imprudent, above-market costs to create a real incentive for utilities to operate economically.

APA

Daniel, J., Sattler, S., Massie, A., & Jacobs, M. (2020). Used, But How Useful? Union of Concerned Scientists. https://www.ucs.org/sites/default/files/2020-05/Used%20but%20How%20Useful%20May%202020.pdf

Chicago

Daniel, Joe, Sandra Sattler, Ashtin Massie, and Mike Jacobs. Used, But How Useful? Union of Concerned Scientists, 2020. https://www.ucs.org/sites/default/files/2020-05/Used%20but%20How%20Useful%20May%202020.pdf.

Wikipedia

{{cite report |last1=Daniel |first1=Joe |last2=Sattler |first2=Sandra |last3=Massie |first3=Ashtin |last4=Jacobs |first4=Mike |title=Used, But How Useful? |publisher=Union of Concerned Scientists |date=May 2020 |url=https://www.ucs.org/sites/default/files/2020-05/Used%20but%20How%20Useful%20May%202020.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{daniel2020used, author = {Daniel, Joe and Sattler, Sandra and Massie, Ashtin and Jacobs, Mike}, title = {{Used, But How Useful?}}, institution = {Union of Concerned Scientists}, year = {2020}, month = may, url = {https://www.ucs.org/sites/default/files/2020-05/Used%20but%20How%20Useful%20May%202020.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }