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.
The grid will require a substantial transformation as more renewable sources come online. Some critics argue technological, financial, and institutional barriers will prevent significant decarbonization of the power sector, but four common clean energy myths are easily debunked by facts and real-world experiences showing the feasibility of a low-carbon energy future.
This white paper is the first in our Incentive Mechanism Design series, which offers perspective on how regulators might decide to design performance incentive mechanisms for success. The paper examines California’s Risk-Reward Incentive Mechanism (RRIM) as a case study to show that, while counterfactuals may be appropriate as an adjustment mechanism, they can also lead to unfair outcomes and unnecessary regulatory conflict.
This white paper is the first in our Incentive Mechanism Design series, which offers perspective on how regulators might decide to design performance incentive mechanisms for success. The paper explores different approaches to simplify the measurement of energy efficiency savings to better align utility incentives with efficiency outcomes. These metrics can be helpful for many states where utility revenue is linked to energy efficiency, but their programs are bogged down in tedious and controversial evaluation, measurement, and verification requirements.
This white paper is the first in our Incentive Mechanism Design, series, which offers perspective on how regulators might decide to design performance incentive mechanisms for success. The paper examines a straw proposal for a new performance incentive to motivate utilities to reduce peak demand–a driver of investment in the electricity system–improving the affordability and environmental performance of the electricity system.
Performance-based regulation shifts utility focus away from capital investment and sales volume, putting focus instead on delivering value for customers—in the form of an affordable, reliable, and clean power system. We have produced several papers and briefs that offer perspective on more of the details of performance-based regulation.
This chapter in Future of Utilities – Utilities of the Future explores the nature of the customer-grid interface from the point of view of the customer. Customers are reconsidering the compromises they make given their new options for distributed energy services. This chapter exposes the underlying nature of the transactions happening at the customer/grid interface. The chapter uses analogies from the commerce and finance world to describe the currency-like features of electricity, and proposes ways of integrating new transactions into a future “fractal” grid.