WSJ editorial belies free-market principles

So says Lew Hay, Chairman and CEO of NextEra Energy, the nation’s largest operator of wind farms, in a recent letter to the Wall Street Journal. The real heist, as Hay points out, occurs when utilities, in a classic anti-competitive move, block transmission lines that could carry clean, inexpensive wind power from wind-rich areas of the central U.S. to population centers in the East and South. Recommended reading.

The Real Heist Is Keeping New, Green Power Sources Out

The Journal normally opposes protectionism, free riding and costly renewable energy, but your editorial on electric transmission ("The Great Transmission Heist," Nov. 8) endorses all three.

The nation’s best renewable resources, which deliver the most energy at the lowest cost, are remote from our cities. New transmission lines are needed to carry cost-efficient renewable energy from areas such as the Midwest, where NextEra Energy is producing wind energy for as little as four to eight cents a kilowatt hour, to population centers further east. Incumbent utilities that oppose new transmission lines are concerned that competition from cheaper forms of energy, whether fueled by wind, coal or natural gas, will reduce the profitability of their older, less efficient units.

There are two sides to this debate: the side that favors free and open competition based on price, and the side that favors protectionism. Those who want to make wind developers pay the entire cost of new transmission lines are simply trying to erect trade barriers against cheap power—a Smoot-Hawley Tariff Act for electricity.

When a new transmission line is built, it often has more than enough capacity for the renewable electrons that will hitch a ride on it. The Journal argues that renewable energy developers want others to "subsidize" new transmission. But when incumbent providers of a good or service benefit from new infrastructure investment without having to shoulder any of the costs, there’s another term for it: "free riding."

Power from offshore wind farm along the Atlantic coast is expected to cost more than 20 cents per kilowatt hour. Power produced in the Midwest costs one-third of that or less. With more transmission, we can move cheaper power to the east and put downward pressure on wholesale power prices. A grid expansion would topple trade barriers and allow customers to enjoy the benefits of more robust price competition.

Lew Hay

Chairman and CEO, NextEra Energy, Inc., Juno Beach, Fla.