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
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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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.
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:
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.
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 Burdened by outdated accounting rules that incentivize investments in legacy technology, cloud adoption by public utilities is relatively low due in large measure by the failure of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.
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?
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.
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.
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.
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