Hogan, William. “ Demand Response Compensation, Net Benefits and Cost Allocation: Preliminary Comments ” (2010).Abstract


    The Federal Energy Regulatory Commission’s Supplemental Notice of Proposed Rulemaking (NOPR) addresses the question of proper compensation for demand response in organized wholesale electricity markets. Assuming that the Commission would proceed with the proposal “to require tariff provisions allowing demand response resources to participate in wholesale energy markets by reducing consumption of electricity from expected levels in response to price signals, to pay those demand response resources, in all hours, the market price of energy (also referred to as the ‘locational marginal price’ or ‘LMP’) for such reductions,” the Commission posed questions about applying a net benefits test and rules for cost allocation.

    There is now an extensive record in this matter, and I have written on the various issues. The purpose of the present paper is to summarize critical points and pose implications for the issues of net benefit tests and cost allocation. The limited time of the technical conference format dictates a certain brevity, referring to the prior submissions for a fuller exposition. My comments highlight several questions: Why are we here? Why is this subject so confusing? Why are retail rates relevant? How can we match ends and means? Do we need a net benefits test? How should we allocate costs? Where should we go from here?


    The Commission’s Supplemental NOPR did not address the underlying arguments presented in response to the original NOPR in this matter. But many of the basic issues in considering net benefits tests and cost allocation arise from the fundamentals that the Commission should address. Despite the important role that LMP plays in successful market design, the Commission should not assume that paying LMP is always appropriate.


    Report, NERC Special. Reliability Impacts of Climate Change Initiatives: Technology Assessment and Scenario Development . NERC. North America Electric Reliability Corporartion, 2010.Abstract

    Climate change initiatives proposed by governments and industry organizations will affect the way energy is used in North America. The aggressiveness or pace of mandates/targets affects near-term and long-term outcomes and the rate of new technology deployments. This report assesses the status and reliability effects from integrating new technologies promulgated by climate change initiatives as well as develops a framework for scenario assessment.

    Brown, Ashley, and Raya Slater. “Smart Grid Issues in State Law and Regulation.” In, 2010. Publisher's VersionAbstract

    Excerpt from the Summary:

    The power sector in the U.S. has been slowly evolving from a series of vertically integrated monopolies providing electric service to discreet geographic service territories, and then to a regionally interconnected, increasingly competitive marketplace. While the transition has been different from region to region, the general trend in the bulk power wholesale market has been one of progress. The changes in the past 20 years have been particularly dramatic. Under prodding by Federal authorities, we have witnessed the emergence of regional transmission organizations (RTOs), sophisticated transmission pricing, the independent power sector, restructured electric utilities, trading in electricity futures and transmission rights, real-time and day-ahead energy markets, and industry unbundling.

    However, the situation at the retail level, where state regulation reigns supreme, has been less clear. While approximately half of state retail markets have not been opened to competition, much of the changes realized in retail markets were not as deep as the changes in wholesale markets. Rates were formulated on an average cost basis. Blended, rather than real-time prices, offered limited opportunity for effective demand-side response.

    This pricing failed to pass on to end-users the sophisticated price signals emanating from the increasingly sophisticated wholesale market. In effect, the price signals for a more efficient power sector were being deflected before they could meaningfully influence demand itself, the most effective influence on overall efficiency. In short, states fell into two broad categories: one characterized by preservation of the monopoly, and a second that featured the somewhat superficial enabling of competition without fully empowering consumers to make the choices that are generally associated with competitive markets.

    There are a variety of reasons for this disconnect between the wholesale and retail markets. An egregious example, of course, was the very conscious decision by California policymakers to legally preclude the passing of wholesale market prices on to end-users. This was a misguided measure that contributed significantly to the crisis that occurred. In most places, however, the disconnect was less a conscious decision than it was the result of other factors. The factors included political difficulties in further reforming markets, the legal residue of the monopoly model, and, not inconsequentially, the lack of a technological infrastructure to support full-market reformation.

    The emergence of smart grid technology can enable us to reform electricity markets and create more efficient and allow cleaner use of electricity. This technology promises to provide customers better and more timely information in order to influence more efficient behavior. Digital automation can fundamentally increase the controllability, functionality and resilience of the electric system. High power quality microgrids can potentially operate as innovative distribution service hubs within the electricity supply system. In addition, two-way communications, real-time meters, day-ahead pricing, micro-generation, appliance controls and other products have the potential to make electricity use far more efficient.

    The issue in this white paper, therefore, is to determine what legal and regulatory relics of an earlier era are still present and may serve as barriers to, or enablers of, the full, economically justifiable deployment and exploitation of smart grid technology. Through an analysis of 11 states, this paper is focused on identifying those historical barriers and enablers, with an emphasis on state regulation. The rationales for those barriers and enablers are then analyzed in both a historical and policy context. The states examined for the purposes of this paper are California, Colorado, Connecticut, Florida, Illinois, Pennsylvania, Massachusetts, New Mexico, New York, Ohio and Texas. This paper then culls the lessons learned from the restructuring experience. Finally, recommendations are made for policymakers, regulators and other stakeholders in both restructured and non-restructured environments.


    McBride Johnson, Philip. “Turf Wars - an Essay.” In, 2010.Abstract
    McBride Johnson, Philip. Turf Wars" - an Essay. Distributed to the Harvard Electricity Policy Group, Fifty-Ninth Plenary Session. Cambridge, MA. May 20, 2010. 4 pages."
    Request for Rehearing of the California Independent System Operator Corporation. The Integration of Large-Scale Renewable Resources into the Spanish Power System. (2010).Abstract
    United States of America before the Federal Energy Regulatory Commission. Request for Rehearing of the California Independent System Operator Corporation. Docket No. ER10-1706-000. Filed September 30, 2010. Accompanying exhibit: EPRI, The Integration of Large-Scale Renewable Resources into the Spanish Power System."" Highlights of Discussions Held During a Visit to Spain, June 1Ò3, 2010. Organized by the Electric Power Research Institute (EPRI) for International Power Industry Executives. July 2010.""