Every utility regulatory model has embedded incentives. This list is intended to help state policymakers and other stakeholders pinpoint questions they can ask and answer to explore how incentives from cost of service regulation and performance regulation relate to today’s power system goals.
Utilities should consider two business models when considering their role as distribution system operators (DSO). In the first, the utility would represent a DSO and run the centralized system, with full visibility into available resources for real-time load balancing and responsibility for construction and maintenance, and be compensated on meeting policy goals. In the second, the utility owns the system, reveals its needs, with a separate DSO entity meeting those needs and integrating all assets including DERs.
DOE’s cost-recovery proposal would roil U.S. wholesale power markets to keep uneconomic coal and nuclear generation operating. This report finds DOE’s proposal could cost customers up to $10.6 billion per year, with up to $7.3 billion borne by customers in PJM Interconnection. More than 80% of the coal generation subsidy would go to just five companies and nearly 90% of the nuclear generation subsidy costs would go to just five companies.
America’s electricity market operators are increasingly looking for ways to make their systems more flexible as more renewables, flexible demand resources, and energy storage come online. This report outlines which types of flexibility are needed for grid reliability, offers advice on how markets can ensure sufficient flexibility, and will help identify ways to manage the grid with a rapidly evolving mix of resources.
A presentation on the future of U.S. wholesale markets, three potential outcome, and related implications for retail power markets from Energy Innovation Vice President Sonia Aggawal.
The Northeastern U.S. is simultaneously home to the most ambitious regional renewable energy goals and the most constrained lands in the U.S. This paper builds upon past work on siting policy to examine siting solutions tailored to meeting renewable energy demand in a land-constrained region. Along with creative new approaches to renewables siting, the paper examines four approaches to reduce the need for land-intensive utility-scale renewables.
The prospect of large grid modernization investment triggers a key question – is it worth it? As different states consider upfront investments in modernizing the grid, regulators need ways to ensure utilities maximize the potential benefits of grid modernization. This white paper provides program design considerations and metrics that can guide utility investment and increase the chances that customers get the most out of grid modernization efforts. A version of the paper was also published in Electricity Policy, and can be found here.
This issue brief examines the potential benefits of expanding CAISO’s footprint to include other Western balancing areas through the lens of improved economics, renewable power integration, and conventional power plant retirements. The report is consistent with recommendations for policymakers articulated in Planning for and Investing in Wires. The report, summarized here also makes the case against a capacity market for a Western RTO recognizing, as Texas did, that it can be a lifeline to inefficient, old, uneconomical plants.
This paper offers a set of recommendations for enabling demand response in order to fully participate in Europe’s wholesale markets. In the short term, it recommends electricity prices should begin to reflect time-varying value of energy, and wholesale markets should establish a right for demand response to participate. In the long term, policymakers should mandate time-varying pricing for all customers; adopt codes and standards encouraging smart appliances, EVs, and in-home automation; reform utility business models to encourage demand response; and improve local value signals via integrated distribution system planning.
This paper explores which regulatory models align utility profit with societal value under scenarios in which traditional, utility-owned solutions may not be optimal for customers. The cases in this paper offer insight into whether and how cost-of-service regulation and its alternatives (performance incentive mechanisms and revenue caps) can align utility shareholder values with societal values.