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Regulation and Policy

Find papers and presentations on all regulation and policy topics, or specifically on the topics of the EPAct; FERC rulings and reports; market "manipulation;" mergers, market power, and antitrust; national energy policy; regulation, governance, and judicial review; state and regional activities; and public power. 

 

Regulation and Policy

Regulation, Governance and Judicial Review

Brown, Ashley. “Regional Regulation: An Option in the Array of Regulatory Institutions for a Restructured Electricity Sector.” In, 1996.Abstract
brown_regionalreg_nov1996.pdf
Excerpt form the Introduction:
The regulatory framework for electricity in the United States has evolved in two tiers, on both
a horizontal and a vertical basis. Horizontally, the two tiers are de jure and voluntary, or de facto.
Vertically, of course, the two tiers are state and federal, subsets of the de jure tier. De jure regulation
has, as might be expected evolved along political or policy or even legal fiction boundary lines. The
voluntary regulatory scheme, perhaps best illustrated by the regional reliability councils, has tended
to evolve along market or physical characteristics and bear, with the possible exception of ERCOT,
at best, little resemblance to any political or jurisdictional boundaries Not surprisingly, as the
electricity market has evolved, the de facto regulatory system, in a geographic, perhaps even geo-
political sense, more accurately reflects the realities of the marketplace. Simply stated, the markets
evolving are neither state specific nor national in scope, rather they are, at one and the same time,
both regional and international.
Brown, Ashley. “Sunshine May Cloud Good Decision Making.""” In, 1992.Abstract
abrown_sunshine_92.pdf
Foremost among a number of legislative reforms imposed upon state utility and regulatory commissions in recent years have been sunshine laws. The intent of sunshine laws is laudable and the idea simple: the public's business ought to be conducted in the open for the public to observe. Decision making should be transparent, with a clearly articulated rationale available for all who seek it. Not only the decision, but its evolution and the decision makers' thought processes, should be fully revealed. Few backroom deals can withstand such scrutiny. Should the level of accountability vary for an appointed or elected public official? In theory, no, but that only addresses questions about the appearance of accountability and openness. Does such a requirement improve the quality of decision
making; or, more importantly, does it improve the quality of decision? There is a strong case that it does not?
Brown, Ashley. “The Overjudicialization of Regulatory Decision Making.” In, 1990.Abstract
brown_overjud_1990.pdf
There is a fundamental contradiction between the substantive task regulatory bodies, such as public utility commissions, are charged with performing and the process imposed upon them for doing it. This contradiction, often reinforced by the nature of judicial review, constitutes a severe hindrance to the effectiveness of regulation
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EPAct

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FERC Rulings and Reports

Gavan, John C., and Rob Gramlich. John C. Gavan and Rob Gramlich - A New State-Federal Cooperation Agenda for Regional and Interregional Transmission, 2021. Publisher's VersionAbstract

Excerpt from the Introduction:

The experience of grid operators and planners in the United States and around the world has shown that both decarbonization and power system resilience will require large-scale regional and inter-regional trans- mission expansion. In the United States, transmission planning, cost recovery, and siting are all subject to both state and federal jurisdiction. To meet the challenge of expanding transmission to implement decarbonization, the Federal Energy Regulation Commission (FERC) and the National Association of Regulatory Utility Commissioners (NARUC) recently announced the Joint Federal-State Task Force on Electric Transmission to focus on this issue.1 Resolving issues of siting and cost recovery for interstate electric transmission lines will encourage constructive state-federal cooperation. The task force and related regional and national coordination among the states, FERC, the Department of Energy (DOE), and federally regulated transmission providers will be critical to ensuring a resilient and clean power system.

Hogan, William W. “CarbonPricing inOrganizedWholesale Electricity Markets .” In, 2020. Publisher's VersionAbstract

Excerpt from the Introduction:

Thank you for the opportunity to participate in this technical conference. My comments here and during the conference are my own and do not represent the opinions of anyone else. The focus of my remarks will be on carbon pricing and the interactions with short-term electricity markets as found in the organized wholesale markets in the United States. I do not address the design and implementation questions focused on investments and resource adequacy that underpin capacity markets.

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Market "Manipulation"

Hogan, William W. “Cross-product Manipulation in Electricity Markets, Microstructure Models and Asymmetric Information.” In, 2019. Publisher's VersionAbstract

Electricity market manipulation enforcement actions have moved from conventional analysis of generator market power in real-time physical markets to material allegations of sustained crossproduct price manipulation in forward financial markets. A major challenge is to develop and apply forward market analytical frameworks and models. This task is more difficult than for the real-time market. An adaptation of cross-product manipulation models from cash-settled financial markets provides an existence demonstration under uncertainty and asymmetric information. The implications of this analysis include strong empirical predictions about necessary randomized strategies that are not likely to be observed or sustainable in electricity markets. Absent these randomized strategies and other market imperfections, the means for achieving sustained forward market price manipulation remains unexplained.

Keywords: market manipulation; electricity markets; limits to arbitrage; asymmetric information

McBride Johnson, Philip. “Turf Wars - an Essay.” In, 2010.Abstract
johnson_turf_wars.pdf
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."

Mergers, Market Power and Anti-Trust

Linares, Pedro, Francisco Javier Santos, Mariano Ventosa, and Luis Lapiedra. “Incorporating oligopoly, CO2 emissions trading and green certificates into a power generation expansion model.” Automatica 44, no. 6 (2008): 1608-1620. Publisher's VersionAbstract
This paper presents a generation expansion model for the power sector which incorporates several features that make it very interesting for application to current electricity markets: it considers the possible oligopolistic behavior of firms, and incorporates relevant policy instruments, carbon emissions trading and tradable green certificates. It combines powerful traditional tools related to the detailed system operation with techniques for modeling the economic market equilibrium and a formulation for the resolution of the emissions permit and tradable green certificates market equilibrium. The model is formulated as a Linear Complementarity Problem (LCP) which allows the optimization problem for each firm considering the power, carbon and green certificate markets to be solved simultaneously. The model has been implemented in GAMS. An application to the Spanish power system is also presented.

National Energy Policy

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Public Power

Casazza, Jack, and Frank Delea. “Understanding Electric Power Systems.” In, 2003. Publisher's VersionAbstract

DESCRIPTION (from Wiley.com)

The Enron scandal notwithstanding, it is important for professionals in the electric power industry and related positions gain a solid understanding of electric power systems and how they work. Written by two veteran power company managers and respected experts, this is a real-world view of electric power systems, how they operate, how the organizations are structured, and how electricity is regulated and priced. 

A comprehensive overview of the electric power industry from the inside
Covers electric power system components, electricity consumption, generation, transmission, distribution, electric utility operation, electric system control, power system reliability, government regulation, utility rate making, and financial considerations.

Includes an extensive glossary of key terms used in the U.S. and also definitions for terms used worldwide.

Regulation, Governance and Judicial Review

Linares, Pedro, Francisco Javier Santos, Mariano Ventosa, and Luis Lapiedra. “Incorporating oligopoly, CO2 emissions trading and green certificates into a power generation expansion model.” Automatica 44, no. 6 (2008): 1608-1620. Publisher's VersionAbstract
This paper presents a generation expansion model for the power sector which incorporates several features that make it very interesting for application to current electricity markets: it considers the possible oligopolistic behavior of firms, and incorporates relevant policy instruments, carbon emissions trading and tradable green certificates. It combines powerful traditional tools related to the detailed system operation with techniques for modeling the economic market equilibrium and a formulation for the resolution of the emissions permit and tradable green certificates market equilibrium. The model is formulated as a Linear Complementarity Problem (LCP) which allows the optimization problem for each firm considering the power, carbon and green certificate markets to be solved simultaneously. The model has been implemented in GAMS. An application to the Spanish power system is also presented.
Cooper, Mark. All Pain, No Gain: Restructuring and Deregulation in the Interstate Electricity Market. Consumer Federation of America, 2002.Abstract
cooper.mark_allpain.restruc.dereg_.in_.elec_.mkt_9-02.pdf

Excerpt from the Executive Summary:

 

WHEN YOU ARE HEADED IN THE WRONG DIRECTION, GOING FASTER DOES NOT HELP

Institutions Should Fit the Facts

Electricity is a unique industry. It is a complex, real time network that requires cooperation and coordination to deliver a vital service. Demand for electricity is inelastic. Consumers faced with high electric prices cannot simply stop using electricity or switch to something else. Supply of electricity is also inelastic. Substantial new power plants take long lead times to construct. The transmission system cannot be expanded easily. Once produced, electricity cannot be stored very efficiently. As a result, it is deeply “affected with the public interest” and requires a balance of public and private responsibilities and incentives to keep it running smoothly. Restructuring and deregulation have undermined these values in the electricity industry. State policymakers recognized these problems and slowed down or reversed the irresponsible rush toward deregulation. Unfortunately, federal policymakers are charging ahead with deregulation policies such as the Electricity Title of the Energy Bill and the Standard Market Design proposal put forth by the Federal Energy Regulatory Commission.

All Pain, No Gain

States have been convinced to slow down or stop restructuring based on a mountain of evidence that restructuring and deregulation of the electricity industry offers enormous risks for consumers and virtually no rewards. Restructuring and deregulation has unleashed abuse of market power, excessive scarcity overcharges, inefficient transactions costs, and a sharp increase in the cost of capital. These cost increases swamp efficiency gains projected for deregulation.

State and Regional Activities

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