As the industry resumes major capital-spending programs, utilities and their stakeholders are rightly concerned about the effects on prices. Traditional regulatory approaches expose utilities to risks and costs, and can bring rate shock when capital spending finally makes its way into customers’ bills. Pre-funding investments can provide a smoother on-ramp to bearing the costs of a 21st-Century utility system — but it also raises questions for utilities to address.
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Author Bio:
Sherman Elliott is an independent consultant and formerly was a commissioner on the Illinois Commerce Commission. Ralph Zarumba is a director in Navigant’s energy practice.
The Republican nominee’s energy plan doesn’t say much about electricity or natural gas. But what it does say should sound familiar to anyone who’s followed energy policy for more than four years.
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Frontlines
Author Bio:
Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com
(July 2012) Thanks for your enlightening editorial about the problems of feed-in tariffs for photovoltaic installations and the distortions they are causing in cost responsibilities among electric utility customers. While these issues are an immediate and growing concern, an entirely different set of problems will emerge over the next decade as the share of renewables in total generation approaches the high levels being dictated by most regulatory authorities.
In competitive power markets based on locational marginal pricing (LMP), the facts sometimes conflict with popular belief. Most notably: 1. When there’s congestion, the books don’t balance, and ratepayers always pay more than the generators receive. The difference is sometimes called “congestion cost.” 2. Congestion in a competitive market doesn’t necessarily increase ratepayers’ costs; and 3. Reductions in LMP are incomplete and sometimes misleading measures of economic benefits of transmission upgrades. These three facts and their implications should be considered in transmission planning, market design, tariffs, and system operations.
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Category:
Energy Risk & Markets
Author Bio:
Hyde M. Merrill (hm@merrillenergy.com) is the proprietor of Merrill Energy, LLC. Richard D. Tabors (rtabors@crai.com) is a vice president at CRA International, and previously was a faculty member at MIT. The views in this article are solely the authors.’ They acknowledge the insightful help of J. Dan Watkiss.
State commissions can select from a toolkit of regulatory approaches to promote desired utility cybersecurity behavior. One approach is to allow the industry to selfregulate, and another approach is to leave the job to the federal government. But sofar, neither the industry nor the federal government have developed and implemented adequate standards for securing the smart grid. States can play a constructive role—albeit perhaps not in the form of traditional regulation.
Author Bio:
Nancy Brockway is the principal of independent consultancy NBrockway & Associates. Previously she was a commissioner with the New Hampshire Public Utilities Commission, and served on commission staffs in Massachusetts and Maine before that. Brockway acknowledges the insightful help of Alison Silverstein, but retains sole responsibility for errors and opinions.
