Electricity Policy

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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

D

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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The Net Metering Riddle

The Net Metering Riddle

By Karl R. Rábago

Net metering opponents have done a masterful job in casting the debate around mistaken assumptions. As regulators conduct NEM 2.0 and Value of Solar proceedings, those errant assumptions should be exposed and the real questions addressed.

 

A

fter 25 years in the electric utility rate-making business, I have come to the conclusion that most rate “fairness” can be better understood if you keep this old math riddle in mind:

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Are Regulators’ Heads in the Cloud?  Primary Challenges to Utility Adoption of Cloud-Based Solutions

Are Regulators’ Heads in the Cloud?  Primary Challenges to Utility Adoption of Cloud-Based Solutions

By Brien Sheahan, Elizabeth McErlean, and Anastasia Palivos

While companies like Amazon, Google, Netflix and Uber are using the cloud and IoT to disrupt entire industries, offering dynamic pricing and services, utilities are lagging behind. As the energy landscape evolves, regulators must consider whether the technical and functional merits of the cloud can create value for utilities and ratepayers.

I.  Introduction 

I

ncreasingly, unregulated businesses are adopting cloud-based information technologies to improve service while leveraging back-office scale and security to generate greater value for consumers and shareholders.  Burdened by outdated accounting rules that incentivize investments in legacy technology, cloud adoption by public utilities is relatively low due in large measure by the failure of regulators to consider forwarding looking policies.  As the electricity grid evolves, cloud-based services will become necessary to manage a smarter, more efficient, and more distributed network and regulators will have to overcome antiquated views regarding how we think about rate-base and cybersecurity.

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An Economist’s Dilemma: To PV or Not to PV, That Is the Question

An Economist’s Dilemma: To PV or Not to PV, That Is the Question

By Ahmad Faruqui

In seeking to reduce $500 monthly utility bills in the most economic way, this Californian found himself engaged in an odyssey of the mind. Why couldn’t I accept the subsidy rooftop solar offers utility customers in a high-cost state? Could I do as well simply pursuing energy efficiency?
D

uring the past 12 months, my wife and I paid up to $500 a month for our combined electricity and gas bills during some summer and winter months.  The annual average was $300 a month.  The high bills hit the pocketbook hard.  But they also caused angst.

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The Policy Aspects of Benefit-Cost Analyses for Distributed Solar Generation and Net Metering

The Policy Aspects of Benefit-Cost Analyses for Distributed Solar Generation and Net Metering

 By Charles J. Cicchetti

Based on the analyses here, rooftop solar should be expanded and NEM practices continued.  If utilities propose another path, state regulators should carefully weigh the reasonable alternatives, including the one presented here.

I. Introduction

T

he purpose of Benefit-to-Cost Analysis (BCA) is to formulate and instruct policies.  Good BCA are objective, but seldom sufficient or determinative.  The first step in a BCA is perhaps the most critical because this is where the policies are defined and assumptions that constrain policy choices are made.  This discussion focuses on two rather interdependent policies related to incentives to increase rooftop solar generation and a relationship, not always uniformly defined, between customers that invest in solar generation on their premises and the utility that has the capability and the duty to distribute electricity from the grid to that customer.

Click here to view article as fully-formatted PDF file.

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Electricity Daily

Dynegy-backed bill would move all of Illinois system, now split, into PJM

Dynegy-backed bill would move all of Illinois system, now split, into PJM

May 27, 2016 -- Yesterday Dynegy proposed legislation that would, it said, provide economic benefits to Illinois consumers, help preserve vital, high-paying power generation jobs, and bring related economic benefits in-state by moving Illinois into the PJM Interconnection market.  The state now is split between two markets.  Central and southern Illinois, served by Ameren , is in the Midcon...

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In organized markets, more supply + nil demand growth = lower power prices

In organized markets, more supply + nil demand growth = lower power prices

The abundance of capacity (mostly thermal) and energy (mostly wind) in competitive Midwest markets, together with flat or declining load growth due to energy efficiency, is pushing higher cost generation that was competitive only a few years ago “out of the money,” market observers say. After what Bloomberg called a “four-year drop in electricity demand” and “a fourfold increase in cheap wind...

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Utilities and corporates, helped by tax incentives, are plunging into renewables

Utilities and corporates, helped by tax incentives, are plunging into renewables

State renewable portfolio standards have long been the top driver of US utility-scale solar and wind energy growth. But this year, “for the first time ever,” over half of new utility-scale solar capacity will come on-line outside state mandates,” according to a May 24 Greentech Media report. In fact, this year’s non-RPS solar capacity will exceed the total utility-scale solar installed in any previo...

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Report: Spent fuel fire at a US nuclear plant could unleash wide devastation

Report: Spent fuel fire at a US nuclear plant could unleash wide devastation

A publication this month in the American Association for the Advancement of Science journal Science concluded that a fire from spent fuel stored at a US nuclear power plant could have catastrophic consequences. The event, based on a simulated incident, should act as a prod to address the problem comprehensively. A major fire “could dwarf the horrific consequences of the Fukushima accident,” says Edwin Ly...

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To lower cost and CO2 emissions for AC in buildings, thermal storage rules

To lower cost and CO2 emissions for AC in buildings, thermal storage rules

A Calmac white paper touts the value of using thermal storage as a complement to or even replacement for pricy and polluting thermal generation to meet summer peak loads—largely air conditioning in commercial buildings—throughout the US. In the Calmac model, thermal storage uses much cheaper and cleaner off-peak energy to meet on-peak demand. The off-peak energy can come from must-run nuclear plants ...

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PJM’s capacity auction proves good for consumers—for generators, not so much

PJM’s capacity auction proves good for consumers—for generators, not so much

May 26, 2016— PJM ’s 2019/2020 capacity auction—in technical terms, its Reliability Pricing Model (RPM) Base Residual Auction (BRA)—was an economic success, with prices down in every region and 167,305.9 MW cleared. The auction left the nation’s largest regional transmission organization with a reserve margin of 22.4%, 5.9% higher than its target reserve margin of 16.5%. The reserve margin “was achi...

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Editorials

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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Arizona parties back away from cliff to consider the possibility of compromise

Arizona parties back away from cliff to consider the possibility of compromise

We were pleased—and a little surprised—to learn the Arizona pro-solar and pro-utility combatants and their proxies have agreed to put down their legal weapons (is Arizona an open-carry state?) and discuss possible compromises that might advance their respective interests.

The battle of ballot measures was shaping up to be one of competing constitutional amendments, divisive and costly no matter whi...

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A few things we know about solar

A few things we know about solar

“Where you stand depends on where you sit.” That adage is generally attributed to Rufus Miles, a Department of Labor official in the late 1940s. It has become known as Miles’ Law.

The maxim has many applications, few more appropriate than understanding the positions of disputants engaged in debates over America’s policies toward solar energy development. 

I say this with reference to Karl Rábago’...

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Community solar is ‘right-size’. Users, solar firms, utilities should collaborate

Community solar is ‘right-size’. Users, solar firms, utilities should collaborate

Community solar is a most promising resource—practiced in many jurisdictions, but not the same creature in any two of them. The extent of the several rollouts differ, the applicable size and rules differ, and the degree to which benefits are shared—among utility customers who subscribe, solar developers, and utilities—also differ from one jurisdiction to another.

Even the name changes from place to...

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Guest Editorial: What do today’s consumers really want from the Smart Grid?

Guest Editorial: What do today’s consumers really want from the Smart Grid?

What do consumers expect from their electric utility? What programs and services are they likely to be interested in? And how can utilities earn their trust? 

Each year the Smart Grid Consumer Collaborative (SGCC) releases its annual State of the Consumer Report. This report helps smart grid stakeholders gain a deeper understanding of how American consumers think about and engage with grid mod...

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