Electricity Policy

Thu07282016

Last updateWed, 27 Jul 2016 2pm

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Bill Effects of Demand-Based Rates on Commonwealth Edison Residential Customers

Bill Effects of Demand-Based Rates on Commonwealth Edison Residential Customers

 By Jeff Zethmayr

A frequent rationale for demand-based rates is the utility assertion that they should reflect customer cost-causation. More analysis is needed to test this assertion, incorporating data from utilities’ cost of service studies and comparing it to individual usage and bill effects.

 

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he tension between revenue security, fairness of cost allocation, and consumers’ control over their bills has long dominated the utility rate design policy discussion. Nationwide, many utilities have pushed for straight-fixed-variable (“SFV”) rate designs,  which increase the fixed portion of customers’ delivery bills. Consumer, environmental, and low-income advocates have resisted this push because higher fixed charges increase bills for lower-use customers, while lower SFV volumetric charges reduce incentives for energy efficiency measures.

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Curating the Future of Rate Design for Residential Customers

Curating the Future of Rate Design for Residential Customers

By Ahmad Faruqui and Wade Davis, with Josephine Duh and Cody Warner

It is time to make three-part rates the standard offering for all residential customers. Doing so will encourage better use of grid capacity, minimize cross-subsidies between customers, and foster adoption of advanced technologies. It’s a win-win-win opportunity. 
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n 2014, 87 percent of all electric utility customers in the U.S. were residential customers, some 129 million out of 147 million. While the typical residential customer uses a lot less energy than the typical non-residential customer, in the aggregate residential customers account for almost four-tenths of the electricity that is consumed in the country.  And since residential customers have lower load factors than non-residential customers, residential customers’ share of peak load is probably higher than four-tenths. Considering emerging trends and advancing technologies, it is more important than ever to price electricity correctly for residential customers.

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Solar Can Wreck the Economics of Competitive Power Markets

Solar Can Wreck the Economics of Competitive Power Markets

By Alex Gilbert

This paper assesses powerful effects of solar technology on electricity service, particularly in organized power markets. It projects solar’s disruptive effects on wholesale markets, on other resources in those markets, and even on other solar resources. Its provocative findings are noted below.

Power Markets Are Due for Massive Changes

 

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uring the last 20 years, the majority of the U.S. electricity system has shifted from the traditional vertically integrated model to competitive wholesale markets. The defining characteristics of these markets, competitive daily energy markets and dispatch, is about to collide with the rapid increase in solar generation, with uncertain consequences.

 

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Will distributed energy end the utility natural monopoly?

Will distributed energy end the utility natural monopoly?

By Steve Corneli and Steve Kihm

Continued improvements in distributed energy resources may erode or even end the natural monopoly characteristics of electric distribution utilities, requiring new regulatory and business models to preserve and enhance the continued social benefits of grid connectivity. 
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n a recent report we wrote for Berkeley Lab’s Future Electric Utility Regulation series (online at FEUR.lbl.gov), we revisited the concept of natural monopoly and asked whether electric distribution utilities will remain natural monopolies if the capabilities and affordability of distributed energy technologies improve sufficiently.  Our basic conclusion: Don’t count on it.

The reasons are straightforward.  Natural monopolies only exist when cheaper alternatives can’t be provided by multiple firms.  The power sector has already seen cheaper and smaller electric generating technologies and competition from independent power producers (IPPs) erode the utility natural monopoly in generation.  In much the same way, continued improvements in the capabilities of distributed energy resources (DERs) to produce, manage and store electricity at ever lower price points would create widespread competitive alternatives to local electric utility delivery service.  If and when that happens, the distribution natural monopoly would fade, as a simple matter of economics.  This does not mean the distribution system or the grid itself should disappear or that it no longer provides critical value to society.  But new regulatory paradigms and business models would be needed to ensure and enhance the ...

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Maryland’s Supreme Court Loss: A Win for Consumers, Competition and States

Maryland’s Supreme Court Loss: A Win for Consumers, Competition and States

 By Scott Hempling

The Federal Power Act, like all collaborative federalism statutes, envisions a federal-state relationship requiring interdependence and cooperation.  But those principles include the statutory goal of just and reasonable rates for all affected states, not just one or even several.

Background: Just the Facts

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ue to generation shortages in transmission-constrained areas, PJM capacity auctions were producing high wholesale prices in Maryland.  The Maryland Commission designed a three-part solution:  (1) Select through competition a wholesale generator to serve in the constrained area.  (2) Order Maryland’s retail utilities to contract for long-term capacity from the winning generator, at the price offered by that generator in that competition.  (3) Draft the contract so that the utility, using retail ratepayer dollars, will pay the generator any difference between the FERC-authorized PJM price and the generator’s contract price—with the payment conditioned on the generator being selected in the PJM capacity auction.  New Jersey passed a statute mandating a similar solution.  

Federal district courts and circuit courts struck both efforts, holding that the Federal Power Act preempted the state actions.  Maryland appealed to the U.S. Supreme Court.

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Electricity Daily

Is the venture capital model the wrong template for energy innovation?

Is the venture capital model the wrong template for energy innovation?

By Kennedy Maize

July 28, 2016 -- In a 2007 TED talk, prominent venture capitalist John Doerr of the Kleiner Perkins firm said, “Green technologies – going green – is bigger than the Internet. It could be the biggest economic opportunity of the 21st century.” He, and many others, believed the venture capital (VC) model was perfect for capturing that opportunity.

Since then, according to a new report from ...

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FERC loses on interpretation of 'de novo' in US District Court enforcement cases

FERC loses on interpretation of 'de novo' in US District Court enforcement cases

The Federal Energy Regulatory Commission has suffered a loss in federal district court over what the legal term “de novo” means in the Federal Power Act for FERC’s enforcement powers. As SNL Energy ’s reporter Glen Boshart writes, the case in the U.S. District Court for the District of Massachusetts is “a case of first impression and a defeat for FERC.” De novo generally means new start. Boshart write...

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Wyo., Japan join in clean coal research

Wyo., Japan join in clean coal research

Wyoming Gov. Matt Mead (R) this week signed an agreement with the Japan Coal Energy Center calling for cooperation between the state and the consortium of Japanese companies on clean coal technology research. According to the Casper Star Tribune , Mead expects a conference in his state within a year to link Japanese researchers with scientists from the University of Wyoming’s School of Energy Resources....

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UK’s Drax burns more wood than coal

UK’s Drax burns more wood than coal

England’s legendary Drax plant, once the largest coal-fired plant in the kingdom, now runs mostly on wood pellets, Bloomberg reports . Biomass accounted for about 70 percent of the fuel for the plant in North Yorkshire in the first half of 2016, compared to 37 percent for the same period in 2015. British policy calls for an end to coal-fired electricity by 2025. Drax Group Plc reported this week that ...

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Aussie senator calls for wind moratorium

Aussie senator calls for wind moratorium

An Australian senator from the state of South Australia has called for a moratorium on new wind farms until a government productivity commission conducts a cost-benefit analysis of how wind power is affecting retail electricity costs, according to The Australian newspaper. Electricity prices in the state jumped from $100/mwh to nearly $14,000/mwh on July 7, with calm weather during the height of the c...

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La Paloma filing at FERC reignites California ISO capacity market debate

La Paloma filing at FERC reignites California ISO capacity market debate

By Bill Henry

July 27, 2016—It’s been three years since discussion of a California ISO -run forward capacity market went silent amid pressure from the California Public Utilities Commission . The regulators were concerned the Federal Energy Regulatory Commission ’s nondiscriminatory market access policies could clash with and hamper California’s energy policies. Since then, the challenging market conditi...

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Editorials

Replacing Diablo Canyon with safer, more flexible options is a better choice

Replacing Diablo Canyon with safer, more flexible options is a better choice

Michael Shellenberger , an acclaimed environmentalist and co-founder of the pro-nuclear Breakthrough Institute , is determined to make Californians and the world see the error in a joint proposal’s plan to close the 2,200 Diablo Canyon nuclear plant. Shellenberger and his allies go so far as to claim that nuclear energy is “clean energy.”

There is a broad global consensus climate change must be checked ...

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Will distributed resources end the distribution natural monopoly? If so, then what?

Will distributed resources end the distribution natural monopoly? If so, then what?

The electricity industry seems to be plagued by a multitude of “interesting problems.” They’re problems that can’t—or at least shouldn’t –be ignored. While after nearly 40 years we are still grappling with the consequences of the energy supply sector of the industry becoming competitive, with passage of the Public Utility Regulatory Policies Act (as evidenced by several excellent panels in FERC’s t...

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What decided Diablo Canyon’s fate?

What decided Diablo Canyon’s fate?

As an outsider, weighing the things known and not known behind PG&E’s decision to retire its two-unit, 2,240-MW Diablo Canyon nuclear plant, shocking as it was, in the end it wasn’t surprising.

Among the things that are both known—and unknown—about the remaining years for California’s last surviving nuclear plant are these:

Relicensing . As the project’s existing licenses expire in November 2024 ...

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Rethinking the climate change challenge from a deeper, wider position

Rethinking the climate change challenge from a deeper, wider position

Cambridge University engineering professor M.J. Kelly has written a paper that challenges much of today’s accepted wisdom about the climate change threat.

It addresses that problem but also steps back from it to look into the abyss posed by a related problem: the need to supply a growing, changing world with energy and how best to do it—thoughtfully and conscientiously.

Reading the paper was unsettlin...

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America’s long fever dream of boundless nuclear power: What’s a country to do?

America’s long fever dream of boundless nuclear power: What’s a country to do?

America’s relationship with civilian nuclear power is curious: it’s like the story of the aging playboy who can’t let go of his alluring but high-maintenance showgirl. The two love each other, dreaming of what might have been and what might be. They can’t quite make the relationship work, but can’t let go either.

I don’t suggest this perhaps inapt metaphor idly, because I have great respect for tho...

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How wide did the Court open the barn door in offering solace to the States?

How wide did the Court open the barn door in offering solace to the States?

I have a predisposition to root for the underdog. With that admission, while I sympathize with the plight of generators, their viability crimped by suddenly cheap gas; and with great respect for the work of PJM Interconnection and the Federal Energy Regulatory Commission, I had wished that FERC and the courts might have found room to sanction the scheme Maryland had cooked up in rendering its deci...

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