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How “Market Failure” Arguments Lead to Misguided Policy
Comparing market outcomes to some unattainable and unidentifiable ideal is not useful in a world of imperfect knowledge and government failure. It is far better to compare outcomes from an intervention against actual realistic alternatives. Read more at the Cato Institute.
The Changing Role of Energy in the U.S. Economy
The CSIS Energy Program conducted research, commissioned papers, held a workshop, and developed this report on the changing role of energy in the U.S. economy. The purpose is twofold: (1) improve understanding of how energy impacts the U.S. economy at multiple levels; and (2) evaluate the performance of policies designed to create economic opportunity in the energy sector. Read more at CSIS.
How I Became a Green Republican — and Started Putting Green Ideas into Action
What Texas Can Teach America About Advanced Clean Energy
“In order to achieve truly sustainable solutions, we should stop focusing on what was or what is, and shift the conversation to ‘what can be.’” Read more at The Cynthia and George Mitchell Foundation.
Texas Doesn’t Need Federal Interference With its Electric Grid
The Great Divergence in Competitive and Monopoly Electricity Price Trends
One-third of a trillion dollars: hat is how much more electricity consumers paid for power in traditional vertical monopoly states over the past decade than if percentage price change trends in those states had been the same as those in electricity choice jurisdictions. This Great Divergence cries out for an explanation. Read more.
Energy transitions are usually slow. Here’s why the clean energy transition might be faster. Read the full article at Vox.com.
Energy is Becoming a Software Business
In states with residential retail choice programs, customers can elect to purchase their electricity directly from their choice of energy suppliers, with the electricity delivered to them by their local utility. The number of customers participating in retail choice programs peaked at 17.2 million customers (13% of total residential customers) in 2014 and has since declined, reaching 16.7 million customers (13% of the national total) in 2017. Read EIA full 2018 summary.
EIA: Electricity Residential Retail Choice Participation Has Declined Since 2014 Peak
The Truth About Electric Choice in Nevada
“It’s rare that citizens get a chance to vote on their right to choose among electricity providers,” writes Geoffrey Lawrence of Reason Foundation in this Oct. 1, 2018 commentary. Read the full commentary at Reason.org.
FERC Order 841
The Federal Energy Regulatory Commission issued Order 841 on Feb. 15, 2018, to remove barriers to the participation of electric storage resources in the capacity, energy, and ancillary service markets operated by Regional Transmission Organizations (RTO) and Independent System Operators (ISO). Specifically, FERC mandated that market rules evolve to accommodate the characteristics of energy storage assets and that market mechanisms evolve to allow storage to fully participate. Read the full order at FERC.gov.
All the scenarios, under both policy environments, meet demand and reliability requirements. They all make energy trading more efficient and smooth out fluctuations in supply and demand. They all reduce the cost of electricity. The drawback is the cost of building the necessary infrastructure. Read the full article at Vox.com.
We’ve Been Talking about a National Grid for Years, It Might be Time to Do It
Why Ohio’s retail electric deregulation has been bad for households and why re-regulation would be even worse
Cheap natural gas and generation subsidies have exposed vulnerabilities in capacity and energy-only market constructs. Can grid operators preserve reliability and maintain fair prices? Read the full story in Utility Drive.
The Great Capacity Market Debate
Electricity Reform and Retail Pricing in Texas
In this study, we analyze monthly residential billing data for both competitive and noncompetitive market areas in the state of Texas to assess the impact of competition. We find that residential rates in competitive and non-competitive areas of Texas have behaved in a manner that is consistent with economic theory. Read more at The Baker Institute.
Competition at the Grid Edge: Innovation and Antitrust Law in the Electricity Sector
To avoid antitrust liability, I argue that utilities and their regulators should explicitly examine the effects of changes in rates on the growing competition between utilities and distributed energy resources like solar power and battery electric storage. This would also have the benefit of making the rate-setting process more transparent and open to stakeholder input as the increasingly competitive electricity market is transformed. Read more at NYU Environmental Law Journal.
State of Charge: Massachusetts Energy Storage Initiative Study
There Is No Free Market for Electricity: Can There Ever Be?
The trade in electricity exists at the intersection of society’s demand for the product’s affordability and constant availability. Obtaining one of these two inverse variables means trading off the other. Yet the electric sector has become still more complicated in recent decades, with the addition of environmental and social considerations from emissions and land use to employment at power plants and mines. Read more at The American Affairs Journal.
Alternatives to Net Metering: A Pathway to Decentralized Energy Markets
Energy distribution companies should be platform companies with open retail market platforms, open interconnection standards and a transparent two-part grid services charge. This regulatory framework and business model would enable the emergence of clearer price signals that would induce resilient and sustainable investments in DERs and networks that increase their value, Lynne Kiesling wrote in this 2016 report for R Street. Read the full report at RStreet.org.
A Brief History of Federal Energy Regulations
Large-scale federal intervention into America’s energy markets began in the 1930s and continued through the 1970s. A series of major laws and executive actions sought to control energy prices, restrict competition, and limit imports. Read the full essay at Downsizing the Federal Government.
Recent technological changes argue for finishing the work of electricity unbundling, not only at the generation level but at the distribution level as well. It’s time to open electricity up and get it moving again. Read the full article at Vox.com.
Power Utilities are Built for the 20th Century, That’s Why They’re Flailing in the 21st
Reforming Texas Electricity Markets
In the United States and around the world, electricity restructuring is converting regulated monopolies into market regimes. The characteristics of those markets, however, are critical determinants of their performance and remain the subjects of active policy debate. Read more at The Cato Institute.
FERC Order 1000
In 2010, FERC updated its cost-allocation and transmission planning requirements for public utility transmission operators. Read the full order.
FERC Order 719
Enacted in 2008 to improve the operation of organized wholesale electric markets in the areas of demand response and market pricing, long-term power contracting, market-monitoring policies, the responsiveness of regional transmission organizations (RTOs) and independent system operators (ISOs) to their customers and other stakeholders, and ultimately to the consumers who benefit from and pay for electricity services. Read the full order.
Energy Policy Act of 2005
Provided tax incentives and loan guarantees to promote energy diversity and the development of innovative energy technologies. Read the full text.
Give Consumers Choice on Utilities
“Some California utilities are working to turn the clock back to the “good ol’ days” of regulation and guaranteed profits. A bill currently before the Legislature would take hard-won economic power from consumers and return it to monopoly utilities, in the name of increasing investment in the electric power system. This should cause all ratepayers concern.” Read more of this 2004 article at The Reason Foundation.
Rethinking Electricity Restructuring
“The poor track record of restructuring stems from systemic problems inherent in the reforms themselves. We recommend total abandonment of restructuring and a more thoroughgoing embrace of markets than contemplated in current restructuring initiatives.” Read more at The Cato Institute.
Demand, Not Supply
“Immediately following the failure of the electrical network from Ohio to the Northeast Coast, a cascade of rhetoric swept across news networks, blaming the blackout on an antiquated grid with inadequate capacity to carry growing demand for electrical energy.” Read the entire 2003 article at The Reason Foundation.
California’s Electricity Crisis: What’s Going On, Who’s to Blame, and What to Do
The California electricity crisis threatens not only the economic well-being of ratepayers in California but the economic well-being of the United States as well. Unfortunately, the political and economic commentary surrounding the crisis is shedding more heat than light. Read full 2001 article at The Cato Institute.
Powering Up California
Many view California’s electricity crisis as proof that electricity deregulation and indeed deregulation in general does not work. This is wrong. Read the entire 2001 article at The Reason Foundation.
Getting Electricity Deregulation Right: How Other States and Nations Have Avoided California’s Mistakes
Pennsylvania, which passed deregulation legislation at the same time as California, has fully implemented deregulation for all customers of electricity. Pennsylvania’s customers have seen an average price decrease of 30 percent and an increase in service options, including “green,” or renewable, power. Read the entire 2001 article at The Reason Foundation.
FERC Order 2000
In 1999, FERC issued an order that encouraged transmission-owning utilities to form regional transmission organizations (RTOs) and tasked them with developing regional transmission plans and pricing structures that would promote competition in wholesale power markets. Read the full order.
The Deregulation of the Electricity Industry: A Primer (1999)
Several states have enacted and others are contemplating changes in the traditional industrial organization of electricity markets. Those changes involve the creation of stock-exchange-like markets for the sale of electricity and the treatment of transmission and distribution lines as “common carriers” that deliver power from any generator to consumers at regulated rates and under regulated conditions. Read more at The Cato Institute.
Congress and Electricity (1998)
In the short run the bulk of the explicit gains from electricity deregulation will probably go to industrial users that alter their operations to take advantage of low off-peak electricity prices. Read more at The Cato Institute.
FERC Order 888
Adopted in 1996, Order 888 regulates how transmission-owning utilities can charge for use of their lines and the terms under which they should give others access. Order 888 also required utilities to separate their transmission and generation businesses. Read the full order.
Energy Policy Act of 1992
EPACT required that competitive generators or any utility be given access to the utilities’ transmission grid on rates and terms that were comparable to those that the utility would charge itself. This access to the transmission grid was central to the growth of wholesale power markets, whereby power generators can use the transmission system to send power to one another at fair and predictable rates and terms. Read the full text.
Public Utility Regulatory Policies Act
Passed by Congress in 1978, PURPA created a new industry of nonutility power generators with guaranteed access to the transmission system to encourage greater diversity in fuel resources. Read the full text at Cornell Law School’s Legal Information Institute.
Federal Power Act of 1920
Originally enacted in 1920, the Federal Power Act establishes the independent Federal Energy Regulatory Commission’s authority over interstate electricity, transmission access and interstate siting, reliability, cybersecurity, and interstate transportation of oil and natural gas. Read the full text.