Electricity Policy

Democratizing Demand and Diversifying Supply: Legal and Economic Principles for the Microgrid Era

by Scott Hempling

Microgrids can enhance security and local control for discrete locations on the larger interconnected electric grid. The relationships and mutual responsibilities of the microgrid and the external grid need to be carefully defined, however. Here is a framework for doing just that.

icrogrid policy, if carried out cost-effectively, offers two distinct benefits:  democratization of demand, allowing consumers to custom-design their own services; and diversity of suppliers, allowing consumers to choose providers based on their merits.  Whether these benefits emerge will depend on how well state legislatures and commissions resolve questions about market structure, customer responsibility and utility compensation.  This article identifies the main questions, along with the legal and economic principles necessary to answer those questions.

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Tapping Into the Potential of Energy Storage

by Hon. Carla J. Peterman and Melicia Charles

By legislation and regulatory decision, California has recognized that its long-term clean energy and environmental goals are not likely to be met absent a viable storage economy.  Regulators have set forth an open, flexible process intended to lead to that result.  

I. The Changing Needs of California’s Electric Infrastructure

alifornia energy policy supports an ambitious transition from conventional fossil generation to renewable and other clean resources. Policies such as the state’s 33 percent Renewable Portfolio Standard, zero net energy goals, the Governor’s Zero Emission Vehicle Plan, and now energy storage targets are positioning the state to attain this future. Imbedded in this vision is the expectation that California will achieve these policy goals while promoting greater efficiency, reliability, affordability, and increased safety.

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New Suppliers for a New Century: Will Incumbency Trump Merit?

 by Scott Hempling

On customer responsibility for infrastructure costs, the NRDC-EEI Joint Statement has it right; but it errs in failing to insist that keepers of the network and providers of new services be chosen based on merit, not incumbency.

n the 20th century, state law protected electric utilities from competition, leaving customers no choice but to buy from vertically integrated monopolies.  Regulators based investor-owned utilities’ profits more on kWh sales and asset growth than on efficiency and innovation. 

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A Review of Fixed Price, Index & Blended Pricing Plans

By John Domagalski, Lev Goldberg, and James Hua

Innovative pricing plans in retail choice markets can help customers better manage price and budget volatility over time. And, though past results are no guarantee of future performance, some pricing plans have proved more stable and lower cost than others.

Introduction

key benefit of competitive retail electric markets is that they offer commercial, industrial, and other business and government customers an ever growing range of choices of contract duration and pricing plans.  These customers   can select contracts that range from monthly to annual to multi-year agreements and can choose among a number of widely available pricing plans.  Pricing plans readily available include “Fixed Price,” “Index,” and “Blended.”  In a fixed price plan customers lock-in a set rate for a defined period of time, whereas customers on an index plan pay a variable hourly ‘index’ price for their electricity.  A blended pricing plan fixes the price for a defined percentage of energy usage while allowing the remainder to ‘float’ on the hourly index.  These innovative options – many of which are not available in traditionally regulated states – have given customers, in competitive retail markets, unprecedented flexibility to align their energy cost strategy with corporate goals, budgets and business planning horizons.

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Calculating the Business Case for Demand Response

by Mark Triplett

Whether for regional transmission systems, integrated utilities, or load serving retailers, there are many direct and indirect benefits – financial, regulatory, reliability, and customer satisfaction – that demand response can provide.

ERC Chairman Jon Wellinghoff is known for saying “Demand response is clearly the ‘killer application’ for the smart grid”.   Others have projected that AutoDR sites will increase five-fold in the next six years.   No doubt in the big picture it seems obvious that demand side management is a must to reduce dependency on fossil fuels and meet growing energy demands on a physically antiquated grid infrastructure.  But what are the quantifiable benefits that demand response (DR) brings to bear, and who in the energy value chain reaps the benefits?  More importantly, how do they calculate the benefits to build a business case in order to move forward in implementing a DR program?  The purpose of this paper is to examine who directly benefits from DR and how to measure results for a solid business case to justify funding and implementation.

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