Publications

    Tabors, R., G. Parker, P. Centollela, and M. Caramanis. “White Paper on Developing Competitive Electricity Markets and Pricing Structures.” In, 2016.Abstract

    Excerpt from the Executive Summary:
    This white paper (paper) describes the design of a new, distribution level market for energy and related electric products from Distributed Energy Resources (DER) and of a statewide digital Platform to animate and facilitate the financial transactions in that market. Tabors Caramanis Rudkevich (TCR) has prepared this paper as an input to the Reforming the Energy Vision (REV) proceedings of the New York State Public Service Commission (the Commission). The paper presents the rationale for establishing this new market structure, explains how the establishment of a digital platform would support the operation of the market, and describes the steps required to implement the Platform and Platform Market.

    Weiss, Jurgen, and Eleanor Denny. “Hurry or Wait: The Pros and Cons of Going Fast or Slow on Climate Change.” Economists' Voice 12, no. 1 (2015): 19-24. Publisher's VersionAbstract
    Climate change risk will likely force the de-carbonization of our electricity sector and thus involve massive investments in long-lived assets using many new and emerging technologies. Since technological progress (independent or dependent on deployment) will likely lower the future cost of those technologies, investing early and rapidly forecloses saving money by installing those technologies at a lower cost later. There are thus benefits to waiting until the costs of renewables fall further. However, there are also costs to waiting. First, given the longevity of greenhouse gases in the atmosphere, cumulative emissions matter and lowering greenhouse gas emissions earlier is beneficial. Second, there is significant uncertainty not only over the rate of change of the cost of low carbon technologies, but also over the cost of greenhouse gas emissions. The costs of waiting are complex in that the distributions themselves are unknown (and quite possibly have “fat” tails). There may also be complex timing issues such as points of no return in terms of global greenhouse gas concentrations, beyond which the costs of adapting to climate change effects become essentially infinite. Hurrying can therefore be considered an insurance policy against the unknown but perhaps increasing risk of catastrophic damage.
    Borenstein, S., and JB. Bushnell. “The U.S. Industry after 20 Years of Restructuring.” In, 2015. Publisher's VersionAbstract

    Prior to the 1990s, most electricity customers in the U.S. were served by regulated, vertically-integrated, monopoly utilities that handled electricity generation, transmission, local distribution and billing/collections. Regulators set retail electricity prices to allow the utility to recover its prudently incurred costs, a process known as cost-of-service regulation. During the 1990s, this model was dis- rupted in many states by “electricity restructuring,” a term used to describe legal changes that allowed both non-utility generators to sell electricity to utilities – displacing the utility generation func- tion – and/or “retail service providers” to buy electricity from gen- erators and sell to end-use customers – displacing the utility pro- curement and billing functions. We review the original economic arguments for electricity restructuring, the potential winners and losers from these changes, and what has actually happened in the subsequent years. We argue that the greatest political motivation for restructuring was rent shifting, not efficiency improvements, and that this explanation is supported by observed waxing and wan- ing of political enthusiasm for electricity reform. While electricity restructuring has brought significant efficiency improvements in generation, it has generally been viewed as a disappointment be- cause the price-reduction promises made by some advocates were based on politically-unsustainable rent transfers. In reality, the electricity rate changes since restructuring have been driven more by exogenous factors – such as generation technology advances and natural gas price fluctuations – than by the effects of restructuring. We argue that a similar dynamic underpins the current political momentum behind distributed generation (primarily rooftop solar PV) which remains costly from a societal viewpoint, but privately economic due to the rent transfers it enables.

    Hogan, William W.Electricity Markets and the Clean Power Plan.” In, 2015. Publisher's VersionAbstract
    The Environmental Protection Agency issued a final rule that defines a broad and complicated set of standards for controlling carbon dioxide (CO2) emissions from affected electricity generating units. (Environmental Protection Agency, 2015b) The proposed national average reduction by 2030 is 32% from the 2005 level of emissions, about half of which has already occurred. (Environmental Protection Agency, 2015j) The rules for new power plants are relatively straightforward and imply little more than reinforcing the current economic choice of natural gas over coal fired generation, given current projections for the price of natural gas. The Clean Power Plan rules for existing power plants arise under a different section of the Clean Air Act and present a more complicated picture. The result has implications for the nature and degree of future limitations on carbon dioxide emissions from the electricity sector. In addition, some versions of the possible implementation plans could have material implications for the operations of Regional Transmission Organizations under the regulations of the Federal Energy Regulatory Commission. The purpose here is to highlight some of the possible directions for relevant policies of electricity system operators.
    Tierney, Susan, and Paul Hibbard. Carbon Control and Competitive Wholesale Electricity Markets: Compliance Paths for Effecient Market Outcomes. Analysis Group, 2015.Abstract

    Excerpt from the Executive Summary

    Acting under its existing authorities under the Clean Air Act (CAA), the U.S. Environmental Protection Agency (EPA) has been developing proposals designed to reduce carbon dioxide (CO2) emissions from new and existing fossil-fuel power plants in the United States.

    Power production is the nation’s largest source of carbon emissions, contributing 37 percent of all CO2 emissions in the U.S. This will be the first time that federal policy will broadly address CO2 emissions from the power sector, and EPA’s new policies will affect over half of the nation’s existing generating capacity.

    EPA and the electric sector have a long track record of successful market-based, regional emission-allowance-trading programs, which can serve as a template for the regulation of CO2 emissions.

    Such programs – for example, the Acid Rain sulfur dioxide (SO2) trading Program, the “NOx SIP Call,” and the Regional Greenhouse Gas Initiative (RGGI) – provide price signals to power plant owners so that they can make their own choices about their lowest-cost path to compliance. These programs have proven to allow for environmental improvements at much lower cost to both power plant owners and electricity consumers.

    There is a natural fit between market-based emission-control programs and competitive wholesale power markets.

    Most of the power plants covered by EPA’s Clean Power Plan operate in competitive wholesale electric markets administered by an Independent System Operator (ISO) or Regional Transmission Organization (RTO) (collectively “RTO”). These regions span more than two-thirds of the states, encompass 70 percent of the nation’s generating capacity, and serve the electricity needs of twothirds of the American people.

    Taylor, Jerry.The Conservative Case for a Carbon Tax.” In, 2015.Abstract
    Costly and economically inefficient command-and-control greenhouse gas regulations are firmly entrenched in law, and there is no plausible scenario in which they can be removed by conservative political force. Even were that not the case, the risks imposed by climate change are real, and a policy of ignoring those risks and hoping for the best is inconsistent with risk management practices conservatives embrace in other, non-climate contexts. Conservatives should embrace a carbon tax (a much less costly means of reducing greenhouse gas emissions) in return for elimination of EPA regulatory authority over greenhouse gas emissions, abolition of green energy subsidies and regulatory mandates, and offsetting tax cuts to provide for revenue neutrality. Arguments that unilateral action by the United States produces little climate benefit, that a carbon tax will expand the size of government, that a carbon tax is a regressive, that adaptation and geo-engineering is preferable to emissions constraint, that economists cannot confidently design a carbon tax that does more good than harm, that the legislative process cannot deliver a carbon tax worth embracing, and that promoting a carbon tax puts conservatives on a slippery political slope are explored and found wanting.
    of the of the House., Office Press Secretary White. “Fact Sheet: The United States and China Issue Joint Presidential Statement on Climate Change with New Domestic Policy Commitments and a Common Vision for an Ambitious Global Climate Agreement in Paris."” In, 2015.Abstract
    On the occasion of President Xi’s State Visit to Washington, D.C., the United States and China today marked another major milestone in their joint leadership in the fight against climate change with the release of a U.S.-China Joint Presidential Statement on Climate Change. The Statement, which builds on last November’s historic announcement by President Obama and President Xi of ambitious, respective post-2020 climate targets, describes a common vision for a new global climate agreement to be concluded in Paris this December. The Statement also includes significant domestic policy announcements and commitments to global climate finance, demonstrating the determination of both countries to act decisively to achieve the goals set last year.

Pages