Publications

Bixby, Robert. Mixed Integer Programming: The State of the Art." Presentation to the Harvard Electricity Policy Group's 80th Plenary Session, Houston, TX, October 2015

Neenan, Bernie. Planning and Operating an Integrated Grid." Presentation to the Harvard Electricity Policy Group 78th Plenary Session, Half Moon Bay, CA, March 2015."

Edelston, Bruce. FERC Order 1000: A Solution Looking for a Problem?" Presentation to the Harvard Electricity Policy Group's 81st Plenary Session, Palm Beach, FL, December 2015."

Pfeifenberger, Johannes. Hidden Values, Missing Markets, and Electricity Policy: The Experience with Storage and Transmission." Presentation to the Harvard Electricity Policy Group's 79th Plenary Session, Washington, DC, June 2015."

Chao, Henry. NYISO Transmission Planning & Cost Allocation." Presentation to the Harvard Electricity Policy Group's 81st Plenary Session, Palm Beach, FL, December 2015."

U.S. Department of Energy. Quadrennial Energy Review: Energy Transmission, Storage, and Distribution Infrastructure. April 2015.

Huntoon, Steve. Transmission: Building the Right Stuff." Presentation to the Harvard Electricity Policy Group's 81st Plenary Session, Palm Beach, FL, December 2015."

Simplex Nodal. Investigate Electricity Markets by Making Your Own: Graphically Build and Solve a Nodal Electricity Market on Your iPhone or iPad." July 2015

Brown, Ashley. Open Transmission Access: Scope, Dimension and Meaning." Presentation to the Segundo Simposio Internacional de Ingenieria, Asuncion, Paraguay, November 2015

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, Michael. Can Low-Carbon Resources Thrive through Markets?" Presentation to the Harvard Electricity Policy Group's 80th Plenary Session, Houston, TX, October 2015."

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.

O'Connor, Philip R. and Erin M. O'Connell-Diaz. Electricity Choice Works." COMPETE, July 2015."

Hogan, William. Electricity Market Design: Hidden Values." Presentation to the Harvard Electricity Policy Group's 79th Plenary Session, Washington, DC, June 2015."

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.

O'Connor, Philip R. and Erin M. O'Connell-Diaz. Evolution of the Revolution: The Sustained Success of Retail Electricity Competition." COMPETE, July 2015."

Terry, Cheryl. Hidden Value, Missing Money, and Electricity Markets." Presentation to the Harvard Electricity Policy Group's 79th Plenary Session, Washington, DC, June 2015."

Excerpt from the Executive Summary

Background

The Environmental Protection Agency’s proposed Clean Power Plan (CPP), published in June 2014, raises substantial operational challenges for regional transmission organizations (RTOs). In the CPP, EPA specifies emission reduction targets for 49 of the 50 states, based on EPA’s modeling that purportedly shows that each state can achieve the specified reduction targets through the use of four “building blocks.” States are to develop plans to meet the targets between 2020 and 2030, and are offered “flexibility” to use any combination of the four building blocks specified and/or other means (if approved by EPA) to achieve these targets. The State plans – required by June 30, 2016 (unless an extension is granted) - must specify how each state intends to meet the targets.

While there are many issues, questions and concerns with the ability of states and utilities to meet EPA’s emission reduction targets based on the use of EPA’s four building blocks (or through other means), building block 2, in particular, raises substantial issues for systems operators and RTO/ISO market operations because it involves changing the current methods of how electricity is dispatched throughout the nation’s bulk power systems.

Either FERC or the states have always overseen how security constrained economic dispatch is conducted to maintain reliability while cost-effectively serving customers. But, if EPA’s proposed rule becomes final, it, and not the system operators that federal and state regulators have entrusted, will make such critical decisions for our nation’s utility customers regardless of costs.

Mather, Barry. Distributed PV Impacts on the Electric System." Presentation to the Harvard Electricity Policy Group 78th Plenary Session, Half Moon Bay, CA, March 2015."

Tierney, Susan, Paul Hibbard, and Craig Aubuchon. Electric System Reliability and EPA's Clean Power Plan: Tools and Practices." Analysis Group. Boston, MA, February 2015."