Publications by Year: 2017

This paper examines carbon tax design options in the United States using an intertemporal computable general equilibrium model of the world economy called G- Cubed. Four policy scenarios explore two overarching issues: (1) the effects of a carbon tax under alternative assumptions about the use of the resulting revenue, and (2) the effects of a system of import charges on carbon-intensive goods (“border carbon adjustments”).

The intersection of autonomous vehicles, ride sharing and transportation electrification could have significant implications for electric utilities. This paper analyses how the development of shared autonomous electric vehicles may make electrified transportation more likely and why this may lead to a more rapid than expected shift in the current transportation paradigm. We also discuss how these trends may affect utilities and suggest what they can do to prepare for the transition

Executive Summary:

Electricity markets employ open access and non‐discrimination to foster competition, market entry, and innovation.    The physical characteristics of the electricity system require explicit consideration of key elements in electricity market design.  Pricing and settlement rules for the real‐time market must provide efficient incentives, both for short‐term operations and long‐run investment. The ERCOT energy‐only market design emphasizes the need to get the real‐time prices right.The recent innovation of the ERCOT Operating Reserve Demand Curve (ORDC) addressed the fundamental problem of inadequate region‐wide scarcity pricing that has plagued other organized markets, which have exhibited inadequate incentives both for reliable operations and efficient investment.  

ERCOT employs an open wholesale electricity market as the basis for short‐term reliable electricity supply as well as for long‐term investments to maintain reliability in the future.  A review of energy price formation in ERCOT leads to two important conclusions: (i) while the ORDC is performing consistently within its design, scarcity price formation is being adversely influenced by factors not contemplated by the ORDC; (ii) other aspects of the ERCOT market design must be improved to better maintain private market response to energy prices as the driver of resource investment, maintenance expenditure and retirement decisions.   

The paper identifies three general issues that have affected ERCOT energy prices in recent years, and recommends policy and price formation improvements consistent with efficient market design. These recommendations cannot reverse the impact of broader economic trends, such as low natural gas prices, or national policies, such as subsidies for investments in renewable resources.  However, the stress of these forces has exposed areas where there is a need for adjustments to pricing rules and policies within ERCOT.  

Glachant, Jean-Michel; Rossetto, Nicol and Vasconcelos, Jorge. Moving the Electricity Transmission System Towards a Decarbonised and Integrated Europe: Missing Pillars and Roadblocks. European University Institute, April 2017.

Klein, Abram W. "Competitive Electricity Markets: Weening Markets from Rent-Seeking Subsidies and Capacity Markets," presented at Nodal Trader Conference, New York, NY, October 26, 2017

Vietor, Richard H.K. and Sheldahl-Thomason, Haviland, Mexico's Energy Reform." January 23, 2017. Boston, MA: Harvard Business School Publishing."

2003 Blackout

Shavel, Ira; Kline, Michael; Lueken, Roger; Ruiz, Pablo. Diversity of Reliability Attributes: A Key Component of the Modern Grid. Prepared for American Petroleum Institute by The Brattle Group, May 2017.

Hibbard, Paul; Tierney, Susan; Franklin, Katherine. Electricity Markets, Reliability and the Evolving U.S. Power System. Analysis Group, June 2017

The Climate Leadership Council's proposal for Carbon Dividends

Bushnell, James; Flagg, Michaela; Mansur, Erin. Working paper: Capacity Markets at a Crossroads. Energy Institute at Haas, April 2017.

Bushnell, James; Flagg, Michaela; Mansur, Erin. Working paper: Capacity Markets at a Crossroads. Energy Institute at Haas, April 2017.